How we grade stock picks  September 24, 2012  |  Finance  While
PunditTracker’s scoring system is largely standardized, stock
picks are an exception. We measure the “outcome” (and hit rate)
of stock recommendations based simply on whether the pick
outperforms the market index (typically the S&P 500) over a one-
year period, unless otherwise specified. Buy recommendations are
graded as correct if they beat the market index, while sell
recommendations are graded as correct if they underperform the
benchmark.  Our typical calibration for a prediction’s
“boldness” to arrive at a letter grade does not come into play
with stocks, however. We instead adjust the hit rate for the
magnitude of the stock’s outperformance or underperformance
relative to the market index. As an example, a stock pick that
goes up 15% when the market is down 10% helps a pundit’s grade
more than a pick that goes up 15% when the market is up 10%.  By
adjusting stock pick returns by the market index returns over
the corresponding period, we ult