After seven months of tracking my 2008 picks -- Wham! -- I went from beating the indices and Berkshire Hathaway (NYSE: BRK.B) to being humbled by the market. However difficult it is to display your failings, once again I will share all. This is the low point since I posted the original story Chasing Value: Final list -- 8 stocks for 2008.

Only Reliance Steel & Aluminum (NYSE: RS) remained in positive territory, down from five stocks that were up in the last report. Sometimes, the reasons for the downslide were more obvious than they were in the cases for my picks. The cutting in half of Valero Energy Corporation (NYSE: VLO) has been reported often, as the largest independent oil refiner in North America has had its profit margins squeezed.

Loews Corporation (NYSE: L) has been hurt by its insurance interests and helped by its holdings -- a 51% stake in Diamond Offshore Drilling, Inc. (NYSE: DO) that has been doing well as the world remains desperate for more oil and natural gas.

The gap between the Dow Jones Industrial Average, Standard & Poor's 500 Index and the technology heavy NASDAQ Composite Index is narrower than in the past.

In January, I added Newcastle Investment Corp. (NYSE: NCT) and Huaneng Power (NYSE: HNP) to my holdings. In June, I added HNP and NCT again as they hit new lows.

Through July, the average return for my eight picks amounted to a loss of -20.45% -- a major collapse from the -3.36% last reported. This substantially underperformed the average return of the indices: -14.06%. The great surprise was with this year's stalking horse, Berkshire Hathaway (NYSE: BRK.B), which was hurt like everything else, dropping further during June and July and falling way behind the indices' average: it's now down -18.27% for the first seven months.

I am including dividends for my picks -- they averaged an overall 3.91% yield through the first quarter. However, NCT reduced its dividend and the average yield is now 2.99% going forward from April. Therefore, I will be adding 0.978% for the first three months and 0.99% (2.99% / 12) for each additional month. Through July, the loss was -20.45 + 0.978 + 0.99 = -18.48%. Using 1.8% for the average dividend of the indices times 7/12 adds 1.05%, and reduces the average loss for the indices to -13.01%.

I continue to hope that 2008 does not end up being about who loses the least. The following are my eight picks with the starting share price as of December 28, 2007:

• Anglo American plc (ADR) (NASDAQ: AAUK) from $30.79 is Down to $28.56 for a loss of -7.24%.
• Bunge Limited (NYSE: BG) from $119.03 is Down to $98.92 for a loss of -16.89%.
• Huaneng Power International (ADR) (NYSE: HNP) from $41.75 is down to $28.17 for a loss of -32.53%.
• Loews Corporation (NYSE: L) from $49.35 is Down to combining $44.56 for a loss of -9.7%.
• Newcastle Investment Corp. (NYSE: NCT) from $13.08 is down to $6.08 for a loss of -53.52%.
• Raytheon Company (NYSE: RTN) from $61.51 is down to $56.93 for a loss of -7.4%.
• Reliance Steel & Aluminum (NYSE: RS) from $54.32 is UP to $63.16 for a gain of +16.27%.
• Valero Energy Corporation (NYSE: VLO) from $70.55 is down to $33.41 for a loss of -52.64%.

The Indices:

• Dow Jones Industrial Average: 13,365.87 dropped to 11,378.02 for a loss -14.87%
• NASDAQ Composite Index: 2,674.46 dropped to 2,325.55 for a loss -13.04%
• Standard & Poor's 500 Index: 1,478.49 dropped to 1,267.38 for a loss -14.28%

This year's "stalking horse" Berkshire Hathaway (NYSE: BRK.B) (I am tracking the 'B' shares, not the more expensive 'A' shares) saw its B shares down from $4,685 to $3,829.00 for a loss of -18.27%.

Federal Reserve Chairman Ben Bernanke announced that the discount rate of 2% will remain constant for a while, which I think is a good thing. Inflation fears seem to have been pacified some and this is supported for the time being by a $30 per barrel drop in oil prices on lower demand, for now.

I still think investors should be looking at the defense sector Chasing Value: Raytheon says 'Game on' and I have added financials Serious Money: Wisdom or folly -- 10 financials updated.

May Recap:

• 2008 picks: -18.48%
• BRK.B: -18.27%
• Major Indices: -13.01%

I can't remember the last time "my pal Warren" was bested by the indices.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. DISCLOSURE: I currently own shares of AAUK, BRK.B, HNP, NCT, and VLO.