What are we looking for? Let's see how the picks of Ron Meisels and Monica Rizk in 2009 have performed. Mr. Meisels and Ms. Rizk are technical analysts for Phases & Cycles Inc. and write a weekly technical analysis pick each week for Saturday's Report on Business.
How did they do? Of the 52 picks in 2009, 34 had closed higher and 18 lower as of Feb. 23. The largest gain was Red Back Mining for 87 per cent, while the largest loss was Richmond Mines at 11 per cent. The average gain of all picks is 12 per cent so far, while the average gain of all the picks the analysts "let run" through the period was 21 per cent.
Losses were minimized because the analysts recommend stop-loss orders. These are pre-set prices that investors should sell at. Fifteen of the 52 positions "stopped out" in the early part of 2009 as market declined sharply.
"This was the right strategy at the time, to lose as little as possible," Mr. Meisels said, adding that only four out of those 15 positions eventually moved higher.
Interestingly, two of the three worst picks were from the gold sector, while two of the three best results were from the same sector, which, as Mr. Meisels says, shows the importance of stock selection within a sector.
(Editor's note: A previous version of this story contained incorrect information in the third to last paragraph.)