Being a top 5% trader with almost no effort
July 21, 2008
I took part in this year’s CNBC portfolio challenge. Well, I sort of did. I’m not a huge fan of contests like that because they tend not to represent real trading very well. The things one needs to do to win them are just about the complete opposite of what good trading is all about.
In this case I only really signed up because a couple of us in the office were talking about it. I don’t think any of us ended up taking it particularly seriously. For my part I found the restrictions a pain, the contest interface less than user-friendly, and generally found the contest poorly designed in many aspects. I did a couple of trades fairly early on, but that was about it.
What I did do, however, is answer trivia questions. Actually, I only started doing that a couple of weeks in and wasn’t always locked in on keeping up, but I got most of them once I did get going. I had a portfolio in which I did no trades, just to see how it’s performance would stack up.
For whatever reason I haven’t been able to see any ranking figures on my portfolios since Thursday. At that time, however, my trivia only account had reached into the top 5%. It’s total return for the contest was about 27%. In other words, by not trading and just answering trivia questions (which everyone could have done) I outperformed 95% of participants.
Doesn’t say much for my fellow contestants, does it?
Obviously, the fact that the market was dropping for most of the contest played its part in dragging folks down. This is a pretty good demonstration of the value of asset allocation, though.
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All due respect, you were competing against @$$#oles who were each running 100s or 1000s of portfolios simultaneously, taking GI-normous risks with every play, in order to maybe possibly “get lucky” with one of them.
It’s not even a real contest. It’s an exercise in random chance.
I would like to know what rank simply holding the SPY would have gotten …
My point exactly. Just once I’d love to see some kind of risk-adjusted return based contest.