...now that the politics have deceased. Many of us never chose sides we just wanted to stick to potential paradigm investments. My presentation will be forthcoming.
...now that the politics have deceased. Many of us never chose sides we just wanted to stick to potential paradigm investments. My presentation will be forthcoming.Yeah, it's so ACTIVE now...
We've underperformed the market over the last 3 years with NPI picks, and only 6 of us have had a market beating stock more than once (ejo, 11x, denny, and tamhas in separate years, preller & ukgold both had 2 picks within the same year).So while its good to get the chatter going, were not as great as we all think unfortunately.
So while its good to get the chatter going, were not as great as we all think unfortunately.I just finished Nate Silver's book, The Signal and the Noise" (only one chapter is on politics) and one of his concluding remarks is that we are generally not as good at making predictions ... which is what one is doing when investing ... as we think we are. His chapter on the the market tends to come to the conclusion that no method or scheme yet known has real predictive advantage over the market. In particular, many schemes are based on fitting a model to historical data, but he makes the point that this isn't prediction and illustrates why such models are unlikely to work consistently.He has a nice example in which he observes that for a certain period and up day was followed by an up day or the reverse, 56% of the time and so proposes a scheme in which money is put into an index fund and left there until there is a down day when it is taken out until there is another up day. If one follows this for the 10 years following, one does, in fact, make quite a bit of money ... if one excludes transaction costs. If one includes transaction costs (albeit at a rate more like working through a broker than an on-line discount service), then one actually loses money. Moreover, one makes a significant fraction of the same amount just by buying at the start and leaving it there. Also, if one applies the same strategy to a more recent 10 year period, one actually loses money, even not including transaction costs because during that 10 year period reversals were more common than remaining the same. With transaction costs, one lost almost everything.In the end, he concludes that the market is similar to earthquake prediction, i.e., we know something about the broad picture, but not enough to predict specifics.I presume your figures about winners were taken from the year portfolios. That may not be entirely fair since I think some people put fairly wild shot guesses in there in the hope that they hit really big. One would hope that most of us wouldn't actually bet our whole portfolio that way. And, of course, there have been some pretty spectacular winners ... a couple of those can do a lot to sweeten a pot where the rest doesn't do much. Also, of course, one doesn't get to sell stocks that are not meeting expectations, but rather are stuck for the whole year. It might be a better evaluation of the board to look at the stocks we actually discuss in a non-trivial way, although there are many where there is a mixed discussion so it would be hard to say whether there was any consensus. MAKO comes to mind!
We've underperformed the market over the last 3 years with NPI picks, and only 6 of us have had a market beating stock more than once (ejo, 11x, denny, and tamhas in separate years, preller & ukgold both had 2 picks within the same year).So while its good to get the chatter going, were not as great as we all think unfortunately.Hi Fuma,While I believe you are correct with your final conclusion, the data that led you to it still falls under the statistic portion of "lies, damn lies and statistics” IMO.For starters you are comparing different dates, so using this year as an example Denny opened the contest to picks on 12-14-2011 and many of us picked our stocks around then, but he used Jan 1 as a starting date which in some cases made a heck of a lot of difference. Using one of my picks as an example GUKYF (Denny recorded it as the ADR GFKSY but when I pointed it out he refused to change it.) On the date I picked it (Dec 15) it was at $2.59 whereas on Jan 1 it was at 3.00 which made quite a difference.The second point I would make is that a heck of a lot of the picks from various posters, from this year at least, had some really impressive moves before they ultimately fell back to earth. Using GUKYF again as an example it hit a high of $6.76 in Feb which if you measure it from my pick date comes to a 167% return in only two months. Although I can’t speak for anyone but myself, I suspect that many if not most of us would strongly consider what I call de-risking the position i.e. take some money off the table after a run like that. (Unfortunately, although I did manage to de-risk my position and lowered my cost basis by 25%ish in GUKYF in the grand scheme of things I pretty much botched the opportunity because I allowed greed disguised as a rational reason for holding on to it all to cloud my judgment.)Finally and this is only my impression, but because it’s only a game, it appears to me that some people go for the moon shot and may not have the conviction to actually invest in them or make them a full position (whatever that is) within their portfolio. The idea that someone in a game might take a flyer on some long shot in order to win a contest really doesn’t tell us much about “great” we are as stock pickers. Coming back to your “were not as great as we all think” comment I heartily agree. Like a lot of investors I pretty much had my head handed to me during the tech wreck and then thinking I had learned my lesson, had the pleasure of having a déjà vu moment during the housing crash/financial melt down. Since those rather unpleasant experiences I have come to accept that I don’t know what I am doing and because of this I needed to focus on the few things I can be absolutely certain of . For me this mostly involves recognizing that profits are only real if you take them and although you may have an “opportunity cost” sitting in cash that cost in no way compares to the cost which you incur through actual loses in equities. So now days I try to religiously harvest profits in my winners irrespective of what I might feel about the companies future prospects and in periods where my portfolio out performs across the board (not linked to any one stock in particular) I raise cash as well, through kicking out a position or in some cases just trimming across the board.Don’t get me wrong, I still believe an investor can add value by educating himself/herself and doing DD I just have come to believe that no matter what your results, it is nearly impossible to tell where skill or lack of it played a role and what is simply luck. (Good or bad) So anyway, for me the problem with this stock picking contest doesn’t involve the scoreboard so much as it does the fact that win or lose there is very little discussion about the picks. In many cases the people picking them didn’t bother writing so much as a paragraph or two on why they picked what they did and there is virtually no follow up by anyone on the picks throughout the year beyond the predictable few picks that were board favorites (MAKO) before the contest even began. Frankly, I don’t recall the last time I acted on an investment idea that I read about at the Fool and NPI is no exception to that rule. But at it’s best, the Fool and NPI have always given me an opportunity to observe and discuss what has led to both success and failure by myself and other investors This type of interaction even when the investment or investment style may not be my cup of tea has been a great help in my ongoing attempts to refine and improve my own investment strategies.If you want to improve the contest IMO here would be my shortlist.1. Have participants agree to only submit ideas that they actually invest in.2. Request participant to provide updates on a quarterly basis or when events might warrant an update.3. If you decide to exit a position submit a post with your reasons for doing so.4. Everyone do a year end review on their picks along with their assessment of where they got it right or where they were wrong. There’s no guarantee this will improve the results but I’m willing to wager we would all get a heck of a lot of more value from the contest than what we receive now.B
B, while I don't disagree that your proposals would make a more serious "contest", there is no one to set rules, so I doubt that it will happen.Who knows if Denny will even run what we have again. Duma has completely disappeared from TMF since the election and Tinker has had only a few posts. Denny seems to be hanging in there on other boards, but may not feel quite the same about NPI anymore.As I have said, I place far more weight on the stocks we actually discuss than on the ones that people pick for the portfolio, especially since the later are little discussed.
Duma has completely disappeared from TMF As the saying goes.Elections have consequencesHope he didn't choke on his bile, well sort of anyway. :<)B
Denny was too childish to even let me play in the contest. We have our rights to disagreements. Dave
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