I have been pretty skeptical of the abilities of stock pickers for decades now. I remember when I was still in business school, the Toronto Star used to run this stock picking exercise where they pick 5 stocks by darts on Jan 1 and also have a bunch of portfolio analysts make their own picks. At the end of the year they would review the results. Over the few years they ran this experiment the darts seemed to always do pretty well. They weren’t always number one but they were always in the top five. Unfortunately, the paper no longer does this experiment. I think it’s because no analyst wants to lose to a bunch of randomly tossed darts .
I have finance degree. But nothing I have learned in business school’s finance courses gave me any better feelings about the abilities of technical analysis to pick the right stocks.
This year, after talking about this dart experiment for many years, I have decided to put some real money behind my belief and run my own dart experiment. I have done this once before as part of a virtual stock game with some friends, and it went incredibly well (but that’s a whole different post).
So tonight I picked the five stocks, well, the darts did actually. I printed the TSX charts by sectors onto one sheet of paper, but due to a lack of access to dart boards (they seem to have disappeared from pubs) I improvised by dropping a pen onto the sheet of paper on the floor. The board was turned, by my husband, my eyes were closed, after each drop to enhance randomness.
So what did the ‘darts’ choose? My stocks are:
- Fairfax Financial Co
- EnCana Corp
- Minefinders Corp
- Silver Standard Reso
- Royal Bank of Canada
Tomorrow I will purchase $1000 each (minus fees) of stocks and see how my little dart portfolio do by the end of the year.
It should be interesting. Nothing like putting real money down.