October 1st Stock Portfolio Challenge

[MatthewC]

Would anyone here be interested in a stock-picking contest?

The rules would be simple.

1. We use the closing prices for the stocks as of the end of the day for October 1st (leads to easily verified information).
2. Portfolio must include at least 10 stocks. (Prevents someone from making a 1-stock portfolio)
3. Each stock must take up at least 1/2 of 100% divided by the number of stocks. Example - A 10-stock portfolio, so 100%/10 = 10% * 50% = 5% (5 % minimum per stock in a 10-stock portfolio) - This prevents people making a 10-stock portfolio and then making 90%+ all about a single stock.
4. You can choose an index (or more than one index if you want). If you choose an index, you are not obligated to make a whole portfolio (unless you include individual stocks. However, you could, for instance, choose the Dow Jones Industrial Average and nothing else.). If you use multiple indexes only, you can allocate your funds among them how you want.
5. Winner determined based on results of the market close on October 1, 2014.
6. No picking stocks based on some news that immediately causes the stock to skyrocket the next day.
7. Individual stocks to come from USA-based stock exchanges. Indexes can come from anywhere.
8. No penny stocks. Stocks must be worth at least $2 per share.

[MatthewC]

So here's my list of stocks. As you might note, there are 21 of them. The strategy I am using for these stocks is to simply weight each stock the same as every other stock.

ALJ Alon USA Energy, Inc. 10.19
CVRR CVR Refining, LP 24.75
DK Delek US Holdings Inc. 21.25
MPC Marathon Petroleum Corporation 64.29
PSX Phillips 66 57.90
VLO Valero Energy Corporation 33.84
CLD Cloud Peak Energy Inc. 14.54
GPRE Green Plains Renewable Energy, Inc. 16.24
AEL American Equity Investment Life Holding Co. 21.33
AFL AFLAC Inc. 63.42
AGM Federal Agricultural Mortgage Corp. 33.97
BPOP Popular, Inc. 26.48
COF Capital One Financial Corp. 69.79
EIG Employers Holdings, Inc. 30.00
EMCI EMC Insurance Group Inc. 30.08
FBRC FBR & Co. 27.05
MBI MBIA Inc. 10.26
SLM SLM Corporation 24.88
STC Stewart Information Services Corp. 32.20
UNM Unum Group 30.83
UVE Universal Insurance Holdings Inc. 7.17


Don't believe picking stocks individually like this can produce superior results? Try to prove it wrong by picking your favorite fund or index!

[KTP]

I don't like the 10 stock rule, otherwise I might play.

In order to win these type of contests, you need to pick one stock and get lucky. Anything else is just playing the averages (might as well buy 100% SPY).

I would probably pick Apple or short Tesla, or find a biotech.

[Strevlac]

Don't believe picking stocks individually like this can produce superior results? Try to prove it wrong by picking your favorite fund or index!

Someone just read their first book on stock investing. Looks like it was the wrong book, unfortunately.

Do I believe picking stocks like that can produce superior results? Sure! Maybe even spectacular results. They can also put your ass in the poor house faster than you can say modern portfolio theory.

Kid, when you pick individual stocks like this you are going up against institutional money managers/market makers who do this kind of thing for a living. Teams of professionals whose sole purpose in life is to beat the market. You think they don't have computers and proprietary algorithms?

Here's the cold hard truth about stock investing for the little guy: there is no reliable system of outperforming an appropriate benchmark index indefinitely on a risk adjusted basis. Any system with a leg up will be arbitraged away in no time. Beating the market is a zero sum game and you are practically guaranteed to be on the losing end.

The worst that can happen to you is not losing a little bit of money. The worst that can happen is you rack up some big gains and you then believe it was because of your skill.

[KTP]

The worst that can happen to you is not losing a little bit of money. The worst that can happen is you rack up some big gains and you then believe it was because of your skill.

+1

Playing a game like this and getting lucky on a few stocks (say you had picked Tesla and Facebook) might make you think you can do it with real money.

Then you go out and put $10,000 in JC Penney or Kodak.

[JBinKC]

So here's my list of stocks. As you might note, there are 21 of them. The strategy I am using for these stocks is to simply weight each stock the same as every other stock.

ALJ Alon USA Energy, Inc. 10.19
CVRR CVR Refining, LP 24.75
DK Delek US Holdings Inc. 21.25
MPC Marathon Petroleum Corporation 64.29
PSX Phillips 66 57.90
VLO Valero Energy Corporation 33.84
CLD Cloud Peak Energy Inc. 14.54
GPRE Green Plains Renewable Energy, Inc. 16.24
AEL American Equity Investment Life Holding Co. 21.33
AFL AFLAC Inc. 63.42
AGM Federal Agricultural Mortgage Corp. 33.97
BPOP Popular, Inc. 26.48
COF Capital One Financial Corp. 69.79
EIG Employers Holdings, Inc. 30.00
EMCI EMC Insurance Group Inc. 30.08
FBRC FBR & Co. 27.05
MBI MBIA Inc. 10.26
SLM SLM Corporation 24.88
STC Stewart Information Services Corp. 32.20
UNM Unum Group 30.83
UVE Universal Insurance Holdings Inc. 7.17


Don't believe picking stocks individually like this can produce superior results? Try to prove it wrong by picking your favorite fund or index!

Matthew- What is the purpose of the diversification here? You are concentrated into 2 industries financials and downstream energy.

Lots of refining here. Any fundamental reason that I don't know of? The generous Brent/WTI spread isn't likely to ever resume again especially once the southern portion of the Keystone pipeline is completed.

[bjl584]

When I was in high school we played a game like this in an Economics class that I had. Me and my partner won the game. We made the most "money" of any other group in the glass over the course of the game (I believe that we played for 8 weeks.) At the end of the day, we had no skill at all. We were 18 years old and we got really lucky with a few good picks.