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Topic: My Chimpanzee Portfolio beats the Sensex! Posted: 04/May/2007 at 12:26pm
In the US, an analyst got a trained Chimpanzee to throw darts at a board that contained random names of stocks in the American stock exchange. Apparently, the Chimpanzee's portfolio of stocks beat the S&P Index and most of the mutual funds.
I have done a similar experiment. I have created a dummy portfolio at ValueResearchOnline.com with a bunch of stocks I picked based on news-worthyness of a stock (not randomly) -
- I started the experiment sometime in October/November 2006 - when the Sensex was at 14,000 levels.
- I 'invested' Rs. 30 Lacs in shares of companies that make news. For example - if a particular company (Eg: IFCI) gets lots of airwaves and exposure multiple times in a week, it gets an entry into my chimpanzee portfolio.
- The exact amount invested in a stock is mostly random. For eg - I invested Rs. 3 Lac in Indiabulls Financial, Rs. 2.3 lacs in Teledata etc
- Since my investment amount (Rs. 30 lac) is limited, if a new stock makes news, I would replace the non-performers with the new stock.
- The chimpanzee portfolio has returned approximately 40% while Sensex is at the same level.
Interesting huh?
Disclaimer:I don't recommend this to anybody. This is just a dummy portfolio and is only 6 months old. This performance might not repeated again.
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Posted: 04/May/2007 at 2:34am
BTW while you are following 'newsworthy' stocks you may be following momentum stocks.. I bet you hit many new 52 week highs by this...
So this is not a random selection..Though meant not to be it follows one investment principle (of buying stocks that hit new 52 week highs).
However, worth noting experimentation Smartcat !
Often we forget there's a company behind every stock,and there's only one reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.
P Lynch
I started the experiment sometime in October/November 2006
------------------------
Well!! silence is not a sign of weakness. Many fellow members might have got these or better returns without making any transactions since oct/nov'06. One don't have to be Chimpanzee for 40% gains. @ TED, we believe in planned approach to wealth creation but it does not mean that there is no other methods. Markets are full of ideas and every ideas have it's day. It is good to observe your experiment until dummy part. Rest is understandable ...
Every return is function of risk but at times we forget that risk is more than just 4 letter word. Risk is essence of return and every new idea is just new equation between 2.
Chimpanzee could win few battles but Teddy wins war!!!. kuch jyada to nahi ho gaya ..hic..
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Posted: 04/May/2007 at 8:14am
Investing is 50% skill and 50% emotion. SO dummy portfolios only have one half of what it takes to be an investor. As Buffet said dummy Investing like sex is very different from the original thing.
Edited by basant - 04/May/2007 at 8:15am
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
Chimpanzee portfolio consists of mainly IPO stocks....Will Network18 be in this portfolio
The experiment was interesting though!
"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett
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Posted: 05/May/2007 at 12:41pm
you may be following momentum stocks..
This type of 'investing' has been done before? I thought I was doing something revolutionary. So I won't get a nobel prize for economics?
Chimpanzee could win few battles but Teddy wins war!
Vipul Ji, aapne mere chimpu ko lalkaara hain. Dekh lenge!
and 50% emotion
I agree. There was zero emotion involved here. In fact, during the Feb 2007 crash, Chimpu not only lost capital but was down by almost 30%. Had I put my real money in this, I would have been out of the market by now, licking my wounds.
Basant/Others, does any of the stocks in the list look good fundamentally? I discovered Praj Industries through this experiment.
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Posted: 05/May/2007 at 12:46pm
Will Network18 be in this portfolio
hmm.. OK. Let me get rid of Guj NRE Coke and replace it with NW18. CNBC doesn't mention NW18 too often though - probably because they are the owners of the channel.
'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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