PrepTest 102, Section 4, Question 11
Taken together, some 2,000 stocks recommended on a(51 more words not shown)
Each of the following, if(5 more words not shown)
- ATaken together, the(18 more words not shown)
- BTaken together, the(24 more words not shown)
- CPerformance of the(27 more words not shown)
- DPerformance of the(22 more words not shown)
- EThe stock portfolios(19 more words not shown)
Reading the argument
Two thousand stock picks performed poorly as a group. Did every guest make poor picks?
Imagine one guest recommended ten stocks and all ten did very well. Other guests' recommendations could still drag down the combined result. The total performance doesn't tell us how each contributor did, so it seems too sweeping to say no one should ever follow any of these experts' recommendations.
The word “any” also makes me pause. Taken literally, it reaches beyond stock advice: someone could make poor investment recommendations and give useful advice about something else. But even keeping the discussion focused on investments, the combined television results leave room for differences among people and recommendations.
What we’re looking for
This is an EXCEPT question. Four answers weaken the argument; we're looking for the one that doesn't. It could support the argument or simply leave it untouched. For each choice, ask whether it gives us a reason to doubt the blanket rejection. We don't need all four weakeners to match the same prediction.
Working the answers
- A
The recent year looks better than the twelve-year combined record. That makes “never follow any recommendation” less convincing: the longer period may obscure a recent improvement. One good year doesn't guarantee future success, but it gives us a reason to question such an unconditional rejection. A weakens, so it isn't the answer.
- B
Underperforming the whole market could still be better than the results of any portfolio actually chosen by other means. B gives the recommendations a favorable practical comparison that the argument omits. The market benchmark alone doesn't establish that every available way of selecting a portfolio would be better. This challenges the sweeping advice to reject their recommendations.
- C
The two performances were measured differently. Dividends are payments from stocks; changes in share value concern what the shares themselves are worth. A stock could provide substantial value in one form without doing as well on the other measure. Comparing one group's dividends with the other group's share-price change doesn't give us a consistent performance comparison. C undercuts the evidence used against the experts.
- DCorrect
Independent analysts obtained the same measurements. That doesn't create a reason to think the reported television-stock performance was wrong or to follow the recommendations despite it. If anything, agreement can add confidence in the measurement.
Be careful: agreement doesn't prove the analysts chose a fair comparison or that the author's broad conclusion follows. Those concerns can remain. But D doesn't introduce a weakness, which is all we need on this EXCEPT question.
- E
The portfolios the guests actually advised beat the market during the same period. That gives us evidence of successful investment work beyond the television picks. It doesn't guarantee every future recommendation will succeed, but it challenges the claim that these people should never be followed. Their television selections aren't the whole picture of their work.
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