In December, Fortune magazine admitted it had been remiss naming insurance giant AIG one of its "10 Stocks To Buy Now" before a yearlong 18 percent decline. "We... didn't expect [the] mortgage unit to be such an albatross," editors wrote. To correct the error, the magazine had a fresh list of "The Best Stocks For 2008" — including Merrill Lynch. "Smart investors should buy this stock before everyone else comes to their senses," Fortune wrote, calling a recent correction in Merrill stock "an overreaction." Investors who followed this advice are now down 93 61 percent. All the big financial magazines butter their bread with dubious prescriptions for how hobbyist investors can beat market professionals, so Fortune is hardly alone in being humiliated by the ongoing market meltdown. We'll spread the embarrassment around after the jump.

Forbes: "Merrill is in damn good shape."

In April, Forbes published a cover story about Merrill Lynch CEO John Thain, headlined "No Thain, No Gain." Like Fortune, Forbes spends a lot of time talking to the executives it covers, and angling for access. It has been known to churn out plenty of hagiography, if not as steadily as its competitor, and the Thain piece edged into that territory: Thain was compared to Superman's alter ego Clark Kent, called the "Mr. Fixit" at his last job and described as "athletic" and "coolheaded." Even his facial expressions were reassuring, with a grin that "says, No need to brace for disaster."

Some of those compliments held up reasonably well, given that Thain managed to sell Merrill just in the nick of time, and at a point when two similarly-troubled competitors could not find buyers.

But then Forbes' Daniel Fisher had to go and write, "Aside from its obvious troubles—afflicting all the largest financial institutions (see chart)—Merrill is in damn good shape... Part of Thain’s job, like that of a good physician, is to do no harm. Meaning: Keep the cash machine going..." Whoops. (Thanks to the tipster who emailed this one in.)

BusinessWeek: "Don't Be Leery Of Lehman"

For the "Inside Wall Street" investing column in its April 7 issue, BusinessWeek touted the benefits of owning Lehman Brothers stock. "Don't Be Leery Of Lehman," the headline on the second item read. The magazine said that "most shell-shocked investors are still leery" of the stock, but then quoted two Lehman bulls:

"The fears surrounding the firm's funding and liquidity position have been overstated," says William Tanona of Goldman Sachs (GS) (which has done business with Lehman). His 12-month target: 58.

... "Lehman's management, led by Richard Fuld, is the best in the business," says [Punk Ziegel's Richard] Bove.

Fortune: Merrill Lynch in "best stocks for 2008" and AIG in 2007 "10 stocks to buy now."

The magazine's thoughts in December 2006 on AIG, before an 18 percent stock decline the following year:

It's clear that AIG was no Enron. Under CEO Martin Sullivan, a 30-year company veteran, AIG... is reporting impressive profit growth once again. Led by a strong showing in its property and casualty business, the company registered a 38 percent jump in net income in the first three quarters of 2006 before investment gains or losses, to $11.6 billion. As Don Yacktman, who recently purchased more than 100,000 shares for his Yacktman Funds, puts it, "A little bit of plastic surgery and - voilà! - the ugly duckling becomes a swan."

Expect more strong results in 2007. Hurricane Katrina, which damaged billions of dollars' worth of homes, commercial structures and energy facilities, should help AIG's P&C business...

The similarly disastrous reasoning behind selecting Merrill Lynch this past December:

Question: What do you call it when an $8 billion asset writedown translates into a $30 billion loss in market cap? Answer: an overreaction. Yes, Merrill's shares deserved a punishment for the firm's mortgage-related bungling. But the public flogging has far exceeded the transgression, which is why smart investors should buy this stock before everyone else comes to their senses.

Surely there are other examples out there. If you know of one, we'd love to hear about it! tips@gawker.com