Stock Contest Comments
Maurice E. Suhre
to me that the *objective* of winning a contest is not the same
as the *objective* of investing. After all, if your stock picks
in a contest go straight down the dumper, you still haven't lost
anything. If you *owned* those turkeys, you'd have lost a lot
(unless you managed to cut your losses).
I guess I'm saying that I can stand a lot of risk in a stock
picking contest, and I might not want anywhere near that risk
for my investments.
It would seem that the strategy for no-money stock contests is to
pick some risky stuff and hope you hit. Sort of like long shots
at the track.
Finally, what does this contest prove? Or accomplish?
Maurice
{decvax,sdcrdcf,ihnp4,ucbvax}!trwrb!suhre
Harold Naparst
>It would seem that the strategy for no-money stock contests is to
>pick some risky stuff and hope you hit. Sort of like long shots
>at the track.
Yes, this is true. That is why I recommended that only NASDAQ, NYSE, and
ASE issues be included in the contest. I posted this a couple of weeks ago.
Perhaps this will cut down on the volatility of the contest. Also, if the
contest is long-term, people will be forced to choose value and growth rather
than a short-term play.
>Finally, what does this contest prove? Or accomplish?
This is a tough question, but I think I see two answers. First, it may be
fun. But most importantly, the results of the contest may point out which
industries are doing well, and in particular which companies are growth
leaders. These are the major goals of investment research. You may say,
"But I can find out which companies are doing well by looking at stock charts"
True, but it may be more graphic if you see (as in the BARRON'S contest)
that the winner had the foresight to invest 20% of his money in each of five
medical imaging companies, and some of these companies experienced 250%
earnings growth. That is useful information. And it is free.
ucbvax!brahms!naparst Harold Naparst/UCB Math Dept/Berkeley CA 94720