Recently I have been ranting about “stock pickers” – making the case that a retarded monkey throwing darts could beat most of the financial publications and their choices for “stocks to buy this year”. I think the dismal showing for both Smart Money and Fortune (see my last entry) probably proves the point – but in an effort to be totally fair I felt I should construct a true “stock picking” competition. We know the stock pickers don’t do very well – but would a retarded monkey really do any better?
First problem – I don’t own a monkey, much less a retarded 0ne.
But luckily I do know someone that has about the same financial knowledge and interest in the markets as a retarded monkey, my nephew Auggie Smith. My caveat here…. I am not saying Auggie has any monkey-like habits or is in any way mentally defective. He does not throw his poop or eat bugs. However, the stock market is really not his thing.
Comedy fans probably know Auggie from his successful stand-up comedy career (www.auggiesmith.com). You might have seen him on Comedy Central or at any number of comedy clubs around the country, and over the last few months he won both the San Francisco and Seattle comedy festivals. In fact, his new iTunes download and CD – “Smell The Thunder” has been at the top of the comedy charts for the last few weeks. He’s a very smart and funny guy, but despite his comedic accuman, Auggie knows nothing about investing. Zero. Zilch. Not really sure what the difference is between the Dow and Downs Syndrome. He doesn’t know what caused the recession, nor does he care. He owns no stocks or bonds and doesn’t have a mortgage or car loan. He primarily wanders from town to town, lives in hotels, works an hour a night in a dark, smoky nightclub, where a shady looking guy hands him a wad of cash at the end of the evening if all goes well.
To prime his financial pumps and celebrate the New Year, Auggie and I each had a couple champagne cocktails, then four of us finished off a twenty-seven-year old magnum of Merlot with a terrific dinner. We then pulled the latest Wall Street Journal list of stocks and tacked it to the dartboard wall. From the regulation dart distance, Auggie took aim, and threw at least twenty darts to choose his ten stocks. Here are the dartboard selections:
Auggie Smith’s Ten Stocks for 2011
- American Express
- Healthcare REIT
- Centerpoint Energy
- Bank of America
- Idex Labb
- Flir Systems
- CH Robinson
- Union Pacific
I must say, a suprisingly good portfolio based on random darts! Technology, finance, real estate, transportation, it’s all there. My one concern. Both competitors have reasonable foreign representation in their portfolio, which may put Auggie at a disadvantage.
So lets meet Auggies’s two competitors.
Kiplinger Magazine’s Ten Stocks for 2011
Every year the finance magazine picks their top stocks, which tend to be a bit less sensationalistic than the typical money magazines, so I think Auggie and his darts are up for some tough competition.
- Caribou Coffee
- China Mobile
- Cisco Systems
- General Electric
- iShares MSCI Brazil
- Johnson & Johnson
- Stealth Gas
- United Rentals
- Wells Fargo
Finally, for our third competitor in the competition, I chose one low cost exchange traded fund, the Vanguard Total World Fund (VT) which invests a broad spectrum of both foreign and domestic stocks.
So a few rules. So for purposes of this competition, I am going to track a $10,000 investment with each competitor. For Auggie and the Kiplinger stocks, I will invest $1000 per stock, including an $8.95 per transaction brokerage fee. I will invest the entire $10,000 in the Vanguard fund including a single $8.95 transaction fee (as if all portfolios were purchase through Schwab).
I will report here once a month for one year. Good luck Auggie!