Readers of this blog know that I am not much of a fan of “stock pickers” – those so called financial experts that can look into their crystal ball and predict which stocks will skyrocket. To me – that is more of a form of gambling than investing.
After watching many stock pickers over a long period of time, I came to the conclusion that they were wrong as much as they were right, and in 2011 I set out to prove the point by constructing a competition. My nephew, the terrific comic Auggie Smith – www.auggiesmith.com – took on the experts at Kiplingers Magazine and Vanguard Funds. Auggie chose his ten stocks for 2011 by literally throwing darts at the Wall Street Journal. We tracked his highly scientific picks against the “Ten Stocks for 2011” Kiplingers chose, and also compared against the Vanguard World ETF just to see how he did against the broad market. After a full year Auggie trounced both competitors.
So in 2013 we are again taking on the stock pickers with an even more scientific approach. While throwing darts at a newspaper is obviously a very legitimate approach towards choosing your investments, we decided to go a step further (and more American), by using a gun to pick our 2013 stocks.
We began by consuming one round of delicious pomegranate martinis (very high in anti-oxidants), followed by a bottle of French champagne.
A note of caution…..you will be handling a firearm, so you might not want to drink more than this. Or you might. Your call.
I then printed out all the stock tickers on dozens of pages of paper. Auggie randomly chose ten pages. From approximately 25 feet he fired a Crossman single shot .19 caliber pellet gun at each page.
Now on to the rules of the competition. We will track these ten stocks, as if we had purchased $1000 worth of each equity, for a total portfolio of $10,000. The competition will be purely based on gain, so dividends won’t be factored into the performance. Since Auggie so easily massacred the folks at Kiplingers last time, we decided to choose an even tougher competitor, so this year we will be taking on the Barron’s Ten Best Stocks for 2013, plus we will be tracking against the low-cost Vanguard Growth ETF (VUG). We will charge an $8.95 transaction fee against each equity, and the same fee against the entire $10,000 purchase of the Vanguard Fund. The value of the portfolio will be calculated on the last trading day of the year. So with those rules in mind I am pleased to present Auggie and his rifle’s picks for the ten best stocks of 2013:
- Ambow Education
- Best Buy
- Cardinal Health
- Cash America International
- Delaware Enhanced Global Income
- Greater China Fund
- Nuveen California Performance Fund
I have to admit a bit of trepidation with some of the picks. Best Buy? Seems a little like investing in Blockbuster. It is also a bit unusual to see the words “California” and “Performance” grouped together, but you never know. Here is the competitor – Barron’s picks:
- Barnes and Noble
- General Dynamics
- JP Morgan Chase
- Marathon Petroleum
- Royal Dutch Shell
- Western Digital
Hmmmm. Looks pretty solid to me, and I have to admit a bit of a conflict. While I don’t personally own any of Auggie’s picks, I own five of Barron’s. But in any case we will run a fair competition, and may the best stock picker win!