Active Stock Picking vs. Indexing Challenge

[Sniper]

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Outperformance of what, exactly??

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I would suggest that 1 year returns of greater than 100%, would be considered excellent outperformance against any benchmark you choose!!!

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Beating the S&P 500 is not a worthwile comparison. As I pointed out there are at least half a dozen sectors and asset classes that have done so in the past few years.


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Your point on this issue is still not clear, as once you get past the point of simple passive S&P500 index investments, you are already in the realm of active management. The simple selection and timing of any other index would have to involve some thought process.

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I'd put up 10k to your 12 if we could get the details worked out. Its possible you could bet more but I couldn't commit to it at this time.

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So, are you saying that if 20 people in this forum took you up on your challenge, you would put up 200K ???

[RocketManJames]

I am interested, but I'd like to get a few questions answered first.

What do you consider active management? Does this mean that the challengers are required to have at least some turnover rate?

Would you allow the challenger to trade in and out of ETFs that represent your baseline index? For example, say that as a challenger I choose large-cap US equities. And, your matching asset-class index would be the S&P500. Would the challenger be allowed to trade in and out of stocks that are in the S&P500 in addition to the SPY ETF? Or, are the challengers limited to stocks only?

Must the challenger always be fully invested? Is there some % of funds that the challenger is allowed to store in money market while awaiting better opportunities?

-RMJ

[buffett]

I found this oldie-but-goodie thread just now as I was trying to remind myself of who rockrock is.
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Can't tell if you are serious about the XLV comment

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Yeah, I was serious. Being restricted to this sector has been a great tailwind for Ed Owens over the years, but if my recollection is correct he has still managed to beat it over most meaningful timeframes. I wish I had his skills.

[Uglyowl]

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Good challenge. I don't want to deal with the hassles of betting real money with a stranger on the internet, but here are my picks to outperform the appropriate indices:
PRAA
MMM
STX
RSTI
CREE
SIRF
MIK

We'll use the closing price today as the basis cost. No trading. In 6 months, if I'm ahead, I'll bump the thread to brag. If you're ahead, you can bump it. [img]/images/graemlins/smirk.gif[/img]

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Nice work so far. Assuming you have equally weighted investments, you are up 10.0% so far (vs. S&P 1.6% and NASDAQ 0.1%):

PRAA +27.4%
MMM +1.1%
STX +19.7%
RSTI +7.4%
CREE <font color="red">-2.5% </font>
SIRF +12.0%
MIK +4.5%

[rockrock]

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So, are you saying that if 20 people in this forum took you up on your challenge, you would put up 200K ???

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The more people that are interested, the less I would bet. I know you want to put some of yourself and some of your IRC ringers in. Only 1 person responded to me via PM btw, and I think this would be tough for me to win against you and your day trading pals but I'd love to take on a basket of mutual funds or someone just doing low-turnover occasional trading.

[rockrock]

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I am interested, but I'd like to get a few questions answered first.

What do you consider active management? Does this mean that the challengers are required to have at least some turnover rate?

Would you allow the challenger to trade in and out of ETFs that represent your baseline index? For example, say that as a challenger I choose large-cap US equities. And, your matching asset-class index would be the S&amp;P500. Would the challenger be allowed to trade in and out of stocks that are in the S&amp;P500 in addition to the SPY ETF? Or, are the challengers limited to stocks only?

Must the challenger always be fully invested? Is there some % of funds that the challenger is allowed to store in money market while awaiting better opportunities?

-RMJ

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The logistics make this hard if not impossible.

For instance, I could never disclose my portfolio until it was over because if you ever pulled ahead, you could just sell everything and duplicate my portfolio and be guaranteed to win.

[Sniper]

Rock... are you signed up for the Forum's 2006 stock competition yet?... go setup a Marketocracy port and join the club. (see the sticky)

[rockrock]

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Rock... are you signed up for the Forum's 2006 stock competition yet?... go setup a Marketocracy port and join the club. (see the sticky)

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Doing so now and thanks - looking forward to it.

[fflaque]

so is this real money or fake money rockrock?

[Sniper]

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so is this real money or fake money rockrock?

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His challenge was a "real money" bet, results to be tracked on a "play money" site!