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BEHIND THE MONEY: Unlikely Winners Since Lehman's Demise Show Challenge of Stock Picking

Wednesday, 16 Sep 2009 | 12:22 PM ET

So you're a money manager 12 months ago and Lehman Brothers collapses, setting off the biggest financial calamity since the Great Depression.

What do you invest in at that moment? Why Whole Foods Markets of course.

With every sector in the S&P 500 down since Lehman and almost every stock within those sectors down, there were very few places to generate meaningful returns for equity money managers. Sure, some pure defensive plays like gold (the commodity) protected you and even gave you some profit, but picking stock winners for a longer time horizon was nearly an impossible challenge.

Glancing through the biggest winners over the last 12 months, a picture emerges of unlikely turnaround stories that took place far away from the financial crisis, but during a consumer recession nonetheless.

Whole Foods Markets shares are up more than 50 percent in the last one year, driven by aggressive cost-cutting and a repositioning of the company as a affordable healthy destination, rather than a high priced gourmet market.

Also on the top performers list: Starbucks. The coffee chain's stock is up more than 20 percent after it closed stores and made the existing ones more efficient.

The market message here, I guess, is that when a financial calamity of sizeable magnitude hits, you probably can't stock pick your way out of it as the drain of money from the asset class of stocks will likely lower mostly all boats.

You will need to use other methods, such as options, short-term trading, short-selling and buying of physical assets like gold, to really make a go of it over the next 12 months. Either that, or take a flyer on a turnaround story that you believe in, that is far removed from the epicenter of the crisis.

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