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Since 2003 I have been a contestant in year-end stock picking contests in which each contestant picks their favorite stock or investment for the upcoming new year. The contests that I participated in were held by Equities Magazine and Fortune Magazine. In the various contests, I was able to compete against dozens of famous stock pickers, who include CNBC’s Jim Cramer, famed mutual fund manager, Mario Gabelli and even Larry Rader who was my mentor during my formative years on Wall Street. Larry was Merrill Lynch’s emerging growth stock analyst who I followed when I worked for Merrill Lynch in the late 1970s.

Bob Flaherty, the founder of Equities Magazine and formerly the editor of Forbes Magazine was one of the media pioneers who initiated annual stock picking contests. He set them up so that he could give his subscribers the opportunity to build a portfolio consisting of the single best or favorite stock picks being made by professional analysts, money managers and writers. The original theory on being able to predict a stock that would be up one year and one day later was so that an investor would be in the position to take advantages of long term capital gains if he or she so chooses.

There is no doubt that picking a favorite stock in December that will be higher in the following year’s December is a tricky proposition for even the most savvy professional investor, analyst or financial writer. This is especially because of the increased volatility of the markets and the increasingly wide spread belief that stocks can no longer be bought and held. The idea that anyone would even attempt such a feat today of picking a favorite stock that will increase in value on a certain date in the future is considered by many to be suicidal. Because picking a stock to perform 365 days out in the future is so difficult many professionals such as CNBC Mad Money’s Jim Cramer have chosen to no longer compete in “favorite or best stock pick for the next year” contests. Cramer did not make a pick for Equities Magazine for 2008, after his favorite stock pick for Equities Magazine for 2007, Drugstore.com (NASDAQ:DSCM), declined by 13%. These are the reasons why stock picking contests have fallen by the wayside and have become virtually extinct.

Fortune Magazine discontinued their annual favorite stock picking contest after a majority of the best picks for 2004 made by their noted 50 greatest investors in their December 2003 year end issue generated losses. Equities Magazine eliminated their year end stock picking contest for 2009. They did so because the picks made by their ten pros for 2007 declined by an average of 21% versus a 4% return for the S&P 500 over the same period and none of Equities pro’s best picks for 2008 increased in price and only two of them including mine outperformed the S&P 500 for 2008.

Even though the ability to pick or predict a stock that will have increased in price 365 days into the future is a dying art I am one of the few who are still willing to practice it. My track record over the years in picking my favorite stock for the ensuing 365 day anniversary date has been good. All of my annual favorite picks that I have made and were published by either Forbes or Equities Magazines have outperformed the S&P 500 in their respective years. Four of the five had long term profits on their one year anniversaries.

The top performer of the five, InfoCrossing, my favorite for 2006, increased by 50%. My 2005 favorite United Online came in second at 28% and it was followed by Net Scout, my favorite for 2007, which came in at third with an increase of 27%. My Fortune Magazine favorite pick for 2004, Webex came in at fourth with a gain of 20%. The shares of two of my five favorite picks, InfoCrossing and Webex no longer trade as they were both acquired at purchase prices which were 128% and 200% above my recommended share prices respectively.

My only loser on its anniversary was my 2008 favorite pick, which was Transcend Services (NASDAQ:TRCR). Its shares were trading at close to my recommended price in August of 2008, but the debacle caused by the fall of Lehman proved to be too much for the shares to overcome and they closed down by 33% on the anniversary date. However, even in Transcend’s case, if one had been patient and held its shares through 2009, they would have been rewarded with $21.15 closing share price on 12/30/09. Based on that price the gain was $6.00 per share or 40% gain (20% per annum) based on the $15.15 price when I picked Transcend as my favorite for calendar 2008.