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Mark Hulbert

How top performers are going for the gold

8/1/12 12:01 AM ET (MarketWatch)Print

CHAPEL HILL, N.C. (MarketWatch) -- Going for the gold?

That's what your chosen investment adviser should be doing every month, of course. But it's especially worth asking the question this August, as the world's attention is focused on the Olympic Games in London.

And, sure enough, that's exactly what the top-performing advisers are doing -- provided we interpret "going for the gold" as taking bold bets that, if successful, will enable those advisers to beat their fellow advisers and win gold medals.

Note carefully, however, that the bold bets they're making for August do not include outsized bets on gold and other precious metals.

These, at least, are the conclusions I reached upon analyzing the stocks and industry groups that are most popular among an all-star lineup of investment advisers.

These advisers would be tough competitors in an investment Olympics. I constructed the group to include only those advisers on the Hulbert Financial Digest's monitored list who have beaten a buy-and-hold strategy in the stock market over the last 15 years. And I then narrowed the group even more by including just the 15 with the best returns over the trailing 12 months.

So, the advisers in my Olympic team have not only proven themselves over the long term, they are playing a recent hot hand as well. They are the group of top performers on which I focus each week in my companion service, Hulbert On Markets: What's Working Now.

Most upgraded industries

The accompanying table lists those industry sectors that recently have received the greatest number of upgrades from these top performers. Continuing a surprising theme I first mentioned a month ago in this space, the banking industry continues to be one of these sectors.

That alone should persuade us that these top performers are willing to buck the prevailing wisdom and make bold bets. But the presence of the "building materials & fixtures" sector should clinch it: The only way that this sector would be a good investment, of course, would be for the long-beleaguered housing industry to show serious signs of recovery.

Top stocks

For a different angle on the bold bets the top performers are making, I next draw your attention to the list of individual stocks that they currently are most recommending for purchase. Interestingly, as you can see from the accompanying table, none of the stocks that the top performers are recommending come from the specific industry sectors that they have recently most upgraded.

What this means: The industry upgrades from the top performers are bets on those sectors rather than bets about just one or two stocks in each of those sectors. You may therefore want to consider various of the sector-specific exchange-traded funds as the best investment vehicles for following the top performers.