Active Stock Picking vs. Indexing Challenge - Page 5

Sniper · #41 03-07-2006, 06:01 PM

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These stocks should be considered as a portfolio. Rockrock made it clear in his OP that he was talking about a competition vs. a basket of actively picked stocks.

The whole sector fund thing is a red herring anyway. Why should a stock picker be evaluated vs. a sector rather than vs. the market as a whole? If I could pick hot sectors, that's just as good as picking hot stocks.

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Aviva, what he said originally was he would match a port up against the appropriate indexes that the individual stocks are a part of. The challenge was on stock picking ability, not about picking the right sector.

I believe his premise is why take the time to pick individual stocks, once you know what sectors you think will outperform, since picking the individual stocks that will beat their respective sector/indexes is hit or miss.

AvivaSimplex · #42 03-07-2006, 06:13 PM

Well, true, that's what he did say. His other posts about indexing and stock picking lead me to believe that he believes in a strong version of the efficient markets hypothesis. That hypothesis would say that all sectors should have equal returns after adjusting for risk. If you could consistently pick winning sectors, that would 1) violate the efficient markets hypothesis, and 2) net you a LOT of money.

rockrock · #43 03-07-2006, 07:20 PM

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rock,

So are you saying...

MIK vs MDY
PRAA vs IJR
MMM vs SPY
STX vs IYW (?)
RSTI vs ??? (Scientific & Technical instruments)
CREE vs MDY
SIRF vs ??? (Scientific & Technical instruments)

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Sniper, you are still one of my favorite posters but obviously I would be losing no matter what index or sector I had picked. Here is what I originally said:

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I will pick an index mutual fund or etf that corresponds to the asset class of those equities (i.e. if you want to pick small caps i would pick IJR, midcaps MDY, micro I would choose IWC, etc)

I will bet I am ahead after any time frame longer than 6 months.

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Since this guy picked stocks from a wide range of capitalizations, I would have to choose the appropriate index against each security.

In retrospect, my challenge was illadvised because the logistics are nearly impossible, but these particular securities illustrate my point beautifully.

He and Jim Cramer did some great stock picking and he is only up 1.6 units in about 4 months. He had the benefit of Cramer touting the stocks to millions of people and still is barely winning from my perspective, although he could be way ahead or it could be closer to even in 2 months.

Not sure what is troubling you with RSTI and SRFI. The marketcap and PE of RSTI stock means I would either pick IJR or IJT. I would choose IGW or something similar vs SRFI.

I hope this clears up some of your frustration and confusion.

rockrock · #44 03-07-2006, 07:39 PM

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rock,

I think you are asking for trouble here. The edge that passive investing has over active picking is small, and needs time to make a huge difference. If your challenge was at least 5years than I would say you'd probably win.

However, this challege is more of a roulette game than a statement about passive vs active investing.

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Not only am I aksing for trouble, I am going to formally ask you for trouble. You aren't barred from the challenge either.

Sniper · #45 03-08-2006, 02:23 AM

rock,

my question is about this statement...

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The funny thing about you injuring your arm trying to pat yourself on the back is that your picks would have been 2-4-1 versus mine and you'd be plus 1.6 units after vig.

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I'm having trouble reconciling your statement with the facts [img]/images/graemlins/wink.gif[/img]

rockrock · #46 03-09-2006, 01:08 AM

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rock,

my question is about this statement...

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The funny thing about you injuring your arm trying to pat yourself on the back is that your picks would have been 2-4-1 versus mine and you'd be plus 1.6 units after vig.

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I'm having trouble reconciling your statement with the facts [img]/images/graemlins/wink.gif[/img]

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Please be more specific about what confuses you. I won 2, lost 4 and was currently pushing against the debt collection company but that one could go either way in a few months.

What facts here are in dispute? 2*1.2 - 4 = -1.6

Sniper · #47 03-11-2006, 06:54 AM

AvivaSimplex vs rockrock - 4 month update

MIK vs MDY
PRAA vs IJR
MMM vs SPY
STX vs IYW
RSTI vs IJR
CREE vs MDY
SIRF vs IGW

100K (+/- $1) ports evenly divided between Aviva's 7 picks and matched up to equivalent distribution to Rock's Index ETF selections, using 11/8/05 closing prices for initial purchases (this chart does not account for dividends)...

Rock... Aviva's returns are 3.5x yours... a sound beating at this point!

rockrock · #48 03-12-2006, 01:43 AM

sniper - yes he and cramer are doing great, but my original challenge had me getting 6 to 5 and I am down less than 2 units by my count overall.

I have also asked the guy to pick 6 or 7 new stocks and we can wager from here.

Not sure what your point is. Yes, 2+2=4, yes water is wet and yes I would be losing at this point but the timeframe isn't up and he has one helluva a promoter on his side...

are u sure about praa? look at this chart
http://finance.yahoo.com/q/bc?s=%5ES...q=l&c=praa,ijr

AvivaSimplex · #49 03-12-2006, 01:52 AM

rock, if I wanted to take you up on your challenge, who would hold the money?

Sniper · #50 03-12-2006, 04:47 AM

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sniper - yes he and cramer are doing great, but my original challenge had me getting 6 to 5 and I am down less than 2 units by my count overall....Not sure what your point is.

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I am trying at this point to clarify the challenge!

Are you saying that rather than the challenge being port against port... you are saying that each individual pick is a seperate bet???