In this edition of Investment Quarterly, we discuss systems for picking top-performing stocks, with particular focus on the Schwab Equity Ratings, a relatively new system that has recently performed well relative to its benchmark. We illustrate why the selection of an appropriate benchmark is essential for evaluating any stock picking system, and how market conditions can skew our perceptions. Finally, we pose an intriguing question—if a stock picking system worked, would you use it? The answer may surprise you.

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