The Goldman Guide: Our Picks Beat the Market This Summer

Written by Rob Goldman   

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It’s Always Something

I apologize in advance for the short edition of The Goldman Guide. Then again, some of you are probably praising the decision. As I write this, the winds are howling outside as the outer band of what is left of Hurricane Irene starts to hit the Baltimore area. I already have a small leak, but I am thankful we are pretty far inland so the weather should not be as bad as on the Eastern Shore.

It got me thinking. During the past 18 months, this area has been hit be 2 blizzards, days apart (early February 2010) a real heat wave, and in less than a week, an earthquake and hurricane.

I shudder to think what is next.

During this time, the market has had some serious ups (early 2010), Flash Crash (May 2010), major ups (4Q10 – 1Q11), big down periods, (May – June 2011) and the fun August.

We have endured a lousy economy, horrific housing and unemployment, sovereign debt issues, budget battles, a serious of oil spikes, the death of Osama Bin Laden, the Arab Spring, and a host of other events here and abroad, too long to list.

Right now, confidence is shaken and the future is foggy. The market looks like an EKG, with the slightest bit of good, bad, or odd news having an impact, or rather, a knee-jerk reaction. Too much anxiety. It just seems like it’s always something.

Making a List, Checking it Twice

Well, it ain’t changing, hon. This volatility, that is. On all these fronts. I, for one, am not going to sit here and just roll with the punches. As far as I am concerned, while everyone is treating each day like it is to be feared, or like Halloween, I am looking ahead. For me, it’s like Christmas. And I plan on buying. Not today, but as I get closer to the big day. But I think we should all think about bottom fishing.

We should all be making our list and checking it twice. Monitor the market before stepping in. Try to make purchases only after you are convinced the market is not naughty but nice. Even if it is temperamental.

I will be putting out my bottom fishing and watch list next week. If you wish to share one, please email me rob@goldmanresearch.com.

The End of Summer…How’d We Do?

After glossing over some just awful performance numbers in general, I thought it might be a good idea to see how our recommendations have performed during this summer rollercoaster.

I am pleased to say that we trounced any and all benchmarks. For the purposes of this look-back, “Summer” is quantified by the period beginning May 27, 2011 (Memorial Day Weekend) through August 26, 2011.

As illustrated in this crude table, our picks as of the initiation dates as a whole have done remarkable well. SSIE and NVLX were released in mid-May, and OCLS was released on June 20, 2011. OHRP was re-introduced on 6/21/11.

I am especially pleased to note that the summer performance is outstanding. The Russell 2000 during this period was down 17% versus our 16% gain. Even if the dates were modified for OCLS and OHRP, the numbers would be nearly identical, on an average return basis.

It should be noted that 3 of the 4 stocks are in the biomed space, and 2 in biotech. However, even when comparing our performance to small cap biotech indices (such as Burrill) their returns for the period are down roughly 13%, versus our gain.

On many occasions, we have noted that it is a stock-picker’s market and it should remain so. We recommend these 4 stocks at these levels and believe that individually and collectively, they will continue to outperform.

Make your list, and be on the lookout for ours…

Until next week….

Analyst: Robert Goldman

Rob Goldman has over 20 years of investment and company research experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell-side analyst, Rob was a senior member of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a boutique investment management firm and Blue and White Investment Management, where he managed Small Cap Growth portfolios and The Blue and White Fund.

Analyst Certification

I, Robert Goldman, hereby certify that the view expressed in this newsletter report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report.

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