Who doesn’t love a throwdown? Some friendly competition?
Especially with real money on the line?
It’s time to Play the Ultimate Match: let’s see what happens when I face-off against 14 finance bloggers in an Investing Throwdown!
“The what?! Throwdown?!”
“Are you drunk?”
Yeah, yeah, I know. I wrote that intro with my best WWE sports announcer voice running through my head. Grrr!
Okay, fine. Competition ain’t my style.
But I do love a challenge. So when a handful of finance bloggers challenged me to beat their investments in a quest for the ultimate investing triumph, I thought:
Here’s how this breaks down:
#1: On January 1, fourteen finance bloggers – including yours truly – invested $1,000 into the stock market.
#2: We picked any investments – stocks, index funds, ETFs, bonds.
#3: We can place trades as much (or as little) as we want throughout the year.
#4: We track our progress for a year.
#5: We crown a victor. Victory!!
Let me take a moment to say: I realize we’re making investing sound like a sport. And it’s not a sport. It’s a sober, analytical … zzzz.
Here’s the deal:
I think investing is awesome. Maybe you do, too.
But there are millions of people who associate “investing” with stodgy and stuffy and boring.
So I want to get people pumped. I want you to leap off your couch and yell, “Bring it on!!”
And when 2014 is over, I want you to keep investing …
…. for the rest of your life.
You MUST invest to grow wealth. Plain and simple. So I’m trying to make investing awesome.
Now: It’s time for some friendly competition. Let’s roll!
Can A Blindfolded Monkey Beat the Financial Experts?
In 1973, Princeton professor Burton Malkiel wrote a must-read book called A Random Walk Down Wall Street. It became a mega-bestseller and is now regarded as an investing classic.
“A blindfolded monkey throwing darts at a newspaper’s financial pages could beat most experts,” Malkiel famously asserted in the book. (That line is classic pop-wisdom among the Investing Geek crowd.)
I want to test if that’s true. But I can’t find an actual monkey.
So I’m going to imitate a monkey, instead. (It isn’t a far stretch.)
Here’s my 3-step investing strategy:
Step 1: Blindfold myself.
Step 2: Throw darts at a list of stocks.
Step 3: Buy stocks.
So … time to pick the players. Which companies will compete on my team?
Check out this one-minute video:
(If you can’t see the video, here’s a direct link to it on YouTube.)
And the winners are ….
- Berkshire Hathaway
- Discovery Communications
- VF Corporation
Here’s what I did.
On New Year’s Day, I bought $100 worth of each of these companies. Let the games begin!
But wait!! I need to compare this to some alternative.
I created a benchmark:
I stuck another $2,000 into a high-yield savings account.
Now we can compare between “playing it safe” in savings vs. investing in individual stocks.
Let me end with a few disclaimers:
#1: This is NOT scientific. It’s just for laughs. It’s an experiment. A quest for victory. A game (of thrones.) It’s not intended to “prove” anything. Don’t draw any conclusions from the results.
#2: Stick with index funds for the vast majority of your portfolio. Invest in stocks with your “fun money” – that extra 10 percent you’ll use to take some risks.
#3: Don’t throw darts, while blindfolded, when your boyfriend is standing in the line-of-fire. #Oops