Experiments are the way to improve the world. Sadly because
of an overkill of regulation experiments are getting rare in the financial
industry. After all nobody wants to be accused of “experimenting with client
money”. Also terrible regulation like MIFID II acts like a barrier of entry to
the industry as the big boys and girls can afford to pay the army of legal and
compliance people necessary to run an asset manager in the EU, but sadly if you
are a small asset management start up you will be bankrupt within your first
year trying to comply with all those regulations before you can start to make
money. So here on this blog let’s run a paper investing experiment using a
monkey style investment plan and a “Cray on” style portfolio investment plan taking
from my book on Amazon “Beat the stock market casino”. The Monkey investment
style can pick an investment first by putting a pin in the quotations page of
the newspaper and the “Cray on” style portfolio then picks something in the
same currency listing that it thinks might do better long term. So a couple of
weeks ago I picked the first 2 investments. The pin in the newspaper “City A.M.”
first was closest to some JP Morgan Indian mutual fund, but I had to bin that
one because I could not track that investment on the web. Next pin hit the US
stock Cisco, so the first paper investment for our experiment in the Monkey
Portfolio was called Cisco. I invested the same $ amount in both portfolio’s
and that means about 91 shares in Cisco Systems could have been bought and tracked on the website www.stockrover.com. The current holdings
for the Monkey Portfolio is just 91 shares in Cisco Systems at a $55.93 last
makes a portfolio $ value of $5090. The Monkey Portfolio is slightly under
water by $16. So far the Monkey Portfolio is a touch better than the S&P
500 since inception. Using the “Stockrover” website will allow for some charts
etc. to check up on performance long term a little easier. Sadly the charts
from “Stockrover” do not copy paste into Blogger so I am afraid I cannot show
you what I see on “Stockrover” as visually pleasing as I had hoped.
Next up was the “Cray on” portfolio. I picked a small but powerful
company called MSCI. If you create new ETF’s you need someone to create the benchmarks
for you and pay the benchmark provider. Passive investing and ETF’s are continuing
to become more popular and I do not see that change any time soon. So I think
MSCI could have a “moat” and pricing power, two quite rare things in the
financial industry. I could buy about 22 shares of MSCI before running out of
cash if I wanted to invest an equal amount of money in Cisco and MSCI. Because
MSCI traded at the high $200 plus level ,
I was stuck with some un-invested cash in the “Cray on” portfolio as per below.
$116 is in cash in the Cray On portfolio. MSCI’s stock made new 52 week highs
last Friday and the position is showing a $298 paper profit. The total $ value
for the Cray On portfolio is $5287 for value of 22 MSCI shares plus $116 makes
a total of $5403. It is very early days and doesn’t say anything, but the “Cray
On” portfolio so far is beating both the S&P 500 and the “Monkey Portfolio”.
June is clearly so far much better than
the performance in May.
So it is now game on between the Monkey and the Cray on portfolio.
May the best one win!
Clearly no recommendation is made here on what you should
do. The value of shares and the income from them can go down and you may get
back less than the amount invested. If you want to make an investment decision,
please seek contact with a financial advisor first. As always when you read
something assume the writer already has a position and is selling when you are
buying…..
