Monkey Stocks – 3 Years on

Anyone around when I announced the winner of my Monkey Stocks League Challenge?

Anyway, as promised in my 2-year update, I bring you the ‘what happened next after 3 years’ update.

Monkey Stocks?

Here’s how I came up with the idea of running my own Monkey Stocks League Challenge.

The majority of the £500 portfolios (consisting of 5 stocks each) which lined up in September 2015 were made up of stocks/shares (from FTSE 350) and were randomly picked out of a hat.

A handful of daft brave souls followed me in purchasing their random stocks for real!

The league also had a couple of portfolios chosen by experts (John K and Huw) and of course, we had M’s infamous portfolio, based on the Dogs of the FTSE strategy, which was the runaway winner of the league after both 1 and 2 years.

One Year vs Two Years vs Three Years

As a reminder, here’s how the top 10 finished after Year 1:

Here’s how the top ten (and the rest of the league) looked after Year 2:

And here are the scores on the doors after Year 3:

Zombie annihilation, with Mr Z’s Undead Monkey Fund taking the top spot, more than doubling his initial investment.

What’s in the winning portfolio?

Three not-so-great shares but the humongous gain (and dividend) from Evraz (EVR) more than made up for those losses (apparently, Roman Abramovich is a majority shareholder – only just found that out!). Of course, EVR is also one of my own Dogs of the FTSE shares…

Anyway, after one year, only 8 portfolios made gains of >10% and there were 10 portfolios showing losses.

After two years, 17 portfolios made gains of >10% (12 of them >20%) and there were only 3 portfolios showing very small losses.

After three years, again, 17 portfolios made gains of >10% (14 of them >20%), with 5 portfolios showing losses.

John K’s Pigmamig Fund was one of those which ended up in the negative after 3 years, but had this been a real portfolio, I’m sure John would have gotten rid of some/all of those stocks to minimise/avoid losses using his own investing strategy.

Still Steady Eddy

Mention must be made of diy’s Mutley’s Magic Formula fund which continued to maintain its steady process and remained in the top 10. This fund was based on Vanguard’s 60% LifeStrategy Fund, ending up with a gain of 34%. Definitely one for the passive investors and one which I will invest in myself.

Random Strategy?

Of course, as before, in no way am I recommending that randomly selecting stocks is a viable investing strategy, though I find it’s a fascinating one, which appeals to my gambling curious nature!

Did my experiment show that randomly picking shares ‘might not’ result in disaster?

It could have all gone horribly wrong, especially as you could have been unlucky and ended up picking Carillion…

Alternatively, fortune could have shone on you and you could have randomly chosen ones like this lot and celebrated seeing your investment quadruple:

Or you could get something in between and according to the experiment, that doesn’t look too bad, with the average gain being 29% over 3 years. Better than sitting 3 years in a cash ISA

Of course, we have seen the FTSE breaking records these past three years. What would  have happened if there was a big Bear market?

No More Updates

A 3-year measurement still isn’t great for a buy and hold strategy but this will be my last update for this league. Whilst the first year was fun (especially as there was a trophy at stake!), it was a complete chore getting all the dividends for the 100+ companies, plus I had to find out what happened to companies which were bought out/sold, changed names or were no longer trading.

I’m still very much interested in the random walk theory in relation to investing so I won’t rule out creating another small experimental portfolio in the future (and again with real money).  Sorry, I won’t be running another such league though – far too much effort and not nearly enough people with skin in the game!

Anyway, I hope you’ve enjoyed this experiment and if after your own research you fancy running something similar, I’d be interested to hear about it!

Who Let the Dogs Out?

I was so impressed by the performance of M’s ‘Underdogs’ portfolio (using the Dogs of the FTSE strategy), the winner of my Monkey Stocks League Challenge, that I was determined to set up a similar portfolio of my own.

Dogs of the FTSE?

The Dogs of the FTSE strategy is the UK equivalent of the US ‘Dogs of the Dow‘ strategy and setting up this portfolio is relatively simple:

  • Choose the ten FTSE 100 shares with the highest yield.
  • Invest equal amounts in all ten and hold for a year.
  • At the end of the year, sell the ones no longer in the top ten, replace with new shares with highest yield.
  • Pocket profit / reinvest / cry at losses* (*delete as applicable)

The rationale is that “a high yield indicates that a company is out of favour with investors. When that happens, its shares will be undervalued relative to its prospects and intrinsic worth. When the market realises this, the firm’s share are likely to rebound and give investors a decent profit.”

Allegedly.

Still, according to Money Observer, over the past 15 years, the Dogs strategy has performed impressively, though of course, past performance is not a guarantee of future results, etc, etc. (*update 01/03/17- here’s Money Observer’s article about the success of the 2016 Dogs).

The strategy was considered back in 2010 by the ermine, although I can’t find an updated post on whether he followed through on it or not.

My Doghouse

I could have just set up a ‘notional’ Dogs of the FTSE portfolio like other sound-minded folk, but risking some real money makes it more interesting for me and worth the effort of tracking the progress of the portfolio. Risking real money also satisfies my gambling gremlin!

I received a bonus from work as part of my severance package so decided to invest the entire lot (as close to) in this ‘experiment’. Note that this will lead to a massive boost to my savings rate for this month!

So, who are the mutts in my Doghouse?

  1. AstraZeneca plc (AZN)
  2. Capita plc (CPI)
  3. HSBC Holdings plc (HSBA)
  4. Intu Properties plc (INTU)
  5. Marks & Spencer Group plc (MKS)
  6. Persimmon plc (PSN)
  7. Royal Dutch Shell Plc (RDSB)
  8. Royal Mail PLC (RMG)
  9. SSE plc (SSE)
  10. Standard Life plc (SL)

Some of these were actually just outside the top 10 but I didn’t want to include any shares which I already held in my portfolio, or any where a dividend cut had been announced (hope I haven’t missed any announcements…).

The shares were purchased on 10th February 2017 (via regular investment to reduce costs). Here’s the live link, which I’ll stick on my header menu at some point. I’ll probably do quarterly or half-yearly updates.

As at close of trading, 10th Feb 2017

Risky

Yes, I’m aware that this strategy is on the risky side, though not as risky as randomly and blindly selecting shares out of the hat like I’ve done before… However, these stocks represent only a small part of my portfolio, it’s a bit of fun (gosh, should investing actually be FUN?), plus I may make some profits along the way. Or not. This will also expose me to the pleasures/perils of buying and selling as opposed to my usual buying and holding strategy.

I was a little concerned at first about the timing of my purchases – stock market is currently high and likely to dip in the year with Brexit/Article 50 triggering, the end of the Trump rally or more shenanigans and other stuff happening in the UK and around the world which may affect the financial markets.  Should I have waited to buy low?

I went ahead anyway because stuff happens all the time and I don’t know how to time the unpredictable market. Plus the money would be doing nothing if left to sit in my bank account, except to tempt me to spend it!

Anyone else tried this strategy before?

I’d be interested in any success/sob stories!

Anyway, have a great weekend all!

Monkey Stocks League Winner 2016!


Twelve months have flown by since I started the Monkey Stocks League Challenge and I can now announce that the winner is…..

M’s Underdogs Fund

Runners-up Craig and his Interesting Initials Fund just couldn’t get anywhere near the winner.

Below is the final snapshot of the league as at the close of trading on 30th September 2016:final16league

And here’s M’s winning portfolio (other portfolios can be found here):

winning-portfolio-16

The Underdogs Fund showed a gain of over 60%, or rather £300 profit on M’s original investment of £500. M’s shares were chosen based on the Dogs of the FTSE strategy, all shares with high yields. The portfolio’s only ‘blip’ were the shares in Standard Chartered, one of the many banks which suffered big losses this year, cutting their dividend completely. Can’t win ’em all, eh M?

Real Portfolios

I must say that I am well chuffed that I not only finished in the top 3 but that my stocks showed a gain of nearly 26%.  Mr Z can’t be too unhappy that his Undead Monkey Fund came 4th, with a gain of nearly 23%. FireVLondon’s B Team Fund ended up pretty much just breaking even, with Cerridwen’s Eye of Toad Fund down by around 10%.

Many thanks to all of you who bought your stocks for real to join me in my mad experiment!

Expertly Picked Funds

I’ve been waiting to say this so… “Yay, the experts got beaten by the monkeys/dogs!

Ok, so both expertly chosen funds finished in the top 10 but still, both were miles from the winning portfolios.

In the duel between the experts, Huw came out on top, with his portfolio Kunniga Apa finishing in 8th place, with a gain of 10%. Incidentally, his Monkey Stocks fund, Blinda Apa, finished one place above!

John Kingham’s Pigmamig Fund finished in 10th place, with a gain of nearly 8%.

However, it was interesting to note that John’s portfolio scored the highest total dividend paid – over time, reinvesting dividend income plays a huge part in investment success, so John had obviously picked his stocks for the long-term.

Steady Eddy

diy’s Mutley’s Magic Formula fund continued to maintain its steady process and finished 5th. This fund was based on Vanguard’s 60% LifeStrategy Fund and steadliy made gains (18% in the end) with relatively little volatility.

Best vs Worst

The best 5 performing shares since the start of the league were Centamin plc, Evraz plc, Glencore plc, NMC Health plc and ARM Holdings plc (I include the latter, as although the shares were bought out last month, funds would have been received for that buyout):

bestfivefinal16

If someone had happened to pick all these shares for their portfolio, they would have nearly doubled their initial investment of £500!

The worst 5 performing shares were Royal Bank of Scotland, Nostrum Oil & Gas plc, Restaurant Group, Interserve plc and Barclays plc.

worstfivefinal16

If you’d had the misfortune to pick this lot, you would have seen your portfolio value drop  by over 40% – ouch!

Notes and Conclusion

Whilst blindly/randomly selecting shares to buy is definitely NOT a recommended strategy for people to try at home, this experiment of mine has perhaps shown how luck and randomness can play a big part in investments. Continue reading

Monkey Stocks League Challenge – Penultimate Update!

With the markets on the up in the face of Brexit Bears, how are the Monkeys et al doing in our Monkey Stocks League Challenge?

Below is a snapshot as at the close of trading on 31st August 2016 and heading for the finish line and seemingly unstoppable are M’s Underdogs Fund!3108leagueCan anyone catch up to this ‘fund’ which is showing a gain of over 52%?  Craig’s Interesting Intials Fund is making a good challenge but it might be too little too late.

With still one more month to go before the winner is announced, has M made a little space on her mantelpiece for the winning trophy?  Yes, there will be an actual physical trophy!

For the Live table (during trading hours, Rank and Value will be updated automatically) and full portfolio listings, have a look here and also via the right sidebar.

All August dividends have been added to the respective portfolios. However, please let me know if I’ve missed any (or if there are any errors) as there are so many to keep track of.

Real Portfolios

Of the real portfolios, behind the Underdogs Fund is my own Funky Monkey Fund.  Mr Z’s Undead Monkey Fund makes it back into the top five, with FireVLondon’s B Team Fund languishing in mid-table obscurity and Cerridwen’s Eye of Toad Fund still in the bottom 3.

Expertly Picked Funds

John Kingham’s Pigmamig Fund drops out of the top 5, with Huw’s Kunniga Apa Fund dropping to 9th place. It looks like the ‘expertly picked’ funds will not be claiming the top spots!

Steady Eddy

As mentioned  before, diy’s Mutley’s Magic Formula fund maintains its steady process and position in the Top 5. This fund is based on Vanguard’s 60% LifeStrategy Fund and appears to not bounce around as much as the funds made up of just 5 stocks.

Best vs Worst

The best 5 performing shares since the start of the league are Centamin, NMC Health, ARM Holdings, Evraz, and Glencore plc.

bestfive0816

If someone had happened to pick all these shares for their portfolio, they would have seen an awesome gain of over 81% on their initial investment of £500!

ARM Holdings is one of my random picks and will shortly be bought out at £17 per share by Softbank. For the purposes of this exercise, as there’s only one more update to go, I’ll leave this as cash in my portfolio, although in real life, I’ll reinvest the cash.

The worst 5 performing shares were Poundland, Barclays Bank, Royal Bank of Scotland, Nostrum Oil & Gas plc and Restaurant Group.

If you’d had the misfortune to pick this lot, you would have seen your portfolio value drop  by nearly 37% – not as bad as last month but still ouch!

worstfive0816

Tune in sometime in October for the exciting finish to this little competition!