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!
