I have entered this contest from the perspective that no matter how hard you try, you cannot do better than the market in general. This stance is based on the Efficient Market Theory. This essentially means that the stock price already incorporates all known information about the company. There are no surprises.
Obviously, this is just a theory, but what better way to test it than through a game?
My strategy for picking stocks is based solely on places I have happened to live and companies I either happen to recognize based on my living there, or have found by searching Google and Yahoo.
I tried to diversify where possible. My portfolio contains stocks in entertainment to Biotech. I tried to spend about $7,000 to $11,000 on each stock. I have a total of 13 companies. Becasue of the effects of Covariance, I believe that my portfolio should do pretty much what the S&P500 is doing.
Below is a list of the companies in my portfolio. I only have a little money left, so I don't think I'll be adding any to this list.
Los Angeles (Birthplace)
Northrop Grunman - Aerospace
Time Warner - Entertainment (They're actually based in New York, but I was thinking Warner Bros. Pictures when I bought)
Disney - Entertainment
Philedelphia
Wyeth - Health Care (They're actually in NJ, but I thought that was close enough.)
Mt. Clemens/Dearborn/Detroit
Ford Motor Co. - Automobiles (We'll see how this bear effects the portfolio.)
Bremerton/Seattle
Microsoft - Computer Software/Services
Amazon.com - Internet Commerce
Ventura, CA
Amgen - Health Care
Grand Rapids, MI
Herman Miller - Furniture
I'm skipping China, as there aren't too many Chinese companies traded in North America
Iowa City, IA
Rockwell Collins - Aerospace
Reno (I never lived here, but my parents do!)
Altair Nanotechnologies - Chemical Engineering
I also chose two other companies: Electronic Arts and Google. EA because I wouldn't mind working for them in the future and Google because Cashtalk is hosted by Blogger.com, which is owned by Google!
There you have it. Those are my picks. Fairly diversified for having only 13 stocks. As of this posting, I'm already up 0.23%. We'll see what happens in the next few weeks.
If you have any questions, or would like to tell me what you bought and why, please post a comment!
2 comments:
Well, I looked at the results this morning, and I'm down .54%!!
What a difference a day makes. Altair Nanotech, tanked this morning. They went from a high of 3.20 to a a current price of 3.05. That's killed a lot of the gains I had from other stocks. Ford is also doing quite poorly and has lost almost a dollar a share since I bought them.
Amgen is my star. They've climbed almost a dollar which is more than a 2% gain. Unfortunately, its not enough to offset my losses.
I'll keep you posted about futher developments. If you haven't joined the contest yet, go ahead and sign up here
Well, I ended up beating the S&P500 today. The S&P slid 1.07% and I only lost 0.72%. Amgen (up 3.02% today) ended up saving the day. Apparently Smith Barney set a target price of $66 based on some Anemia drugs they produce. If they get to $66, I would be happy and that might help offset my losses in Ford.
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