The second annual investment contest wrapped up on December 31st with a record 16 participants. For the second straight year, more portfolios underperformed the S&P 500 than outperformed, showing how difficult it is to outperform the index.
|Greg W||16.49 %|
|S&P 500||13.47 %|
|Mike N||6.66 %|
|Mike H||2.43 %|
Tony won this years contest, thanks largely to his huge January 2011 gain with USG (+26%), and MGM International (+25%). Tom also deserves special mention, finishing 2nd this year after a 3rd place finish last year. Tom’s picks are likely the best over the two year period of the contest.
I caught up with Tony via email to get more insight into his strategy that led him to such a huge gain for the year. “For the first few months I picked stocks from a variety of fields, banking, housing, hi-tech, gaming. I deleted them if they had a big run up and added them back in if they had fallen. Mid year I grew tired of working at it, so I just picked 4-5 stocks from the top of my head and kept them. Last couple months of the year I had a lead so I added some mutual funds to keep a more stable portfolio that would not be affected too much by one stock.”
Tony appears to be a top down investor, identifying market sectors that he believes will outperform the market, then identifying appropriate stocks in the chosen sectors. Interestingly, when evaluating stocks to buy, Tony also uses technical analysis to choose his stocks, looking at market performance instead of finanials to make trading decisions. “(I buy a stock when) technically is it at a low point. If I feel like paying attention the technical are more important than the fundamentals. But you have to be ready to dump it after a run up.” . So take heart those of you that don’t dig into company 10k’s and 8qs, not all successful investors follow historical financials closely. But you do have to pay attention.
Tony’s favorite stock right now is USG. “just because the housing market has been so beaten up so I think there is upside. But it has already had some bit run ups so I’m not sure how much more it has.”. Tony keeps the number of stocks he watches limited, “I pretty much stick with stocks I have been watching, a very small selection.”.
Tony’s market prediction for 2013? “Big ups and downs as we have a series of financial cliffs.”. Hmm.. sounds like a tricky market for fundamental and technical investors alike.
Thanks to all who participated in 2012, and good luck to all in 2013.