I like to crash stock-picking contests by entering the returns of my personal portfolio. I include all of my stock investments – no cherry-picking. Last year I showed how I had well above-average results in each of 4 years of contests among one group of bloggers. However, this isn’t much of a reflection on me because my portfolio is mostly indexed; it’s the collective results of the other bloggers that was sub-par.
A commenter on my post last year (Robb at Boomer and Echo) observed that if I had entered a different 2012 stock-picking contest run by Financial Uproar, I would have come in last place. In fact, the average results were 20.7% ahead of my real-money portfolio. I decided to take a peek again this year to see if they have more magic.
For 2013, Financial Uproar’s stock-pickers got an average return of 21.6%. However, my real-money return for 2013 was 26.7%. So, we have a mean reversion of 4.1%1. I’m in fifth place out of 14 entries. This still doesn’t come close to making up for last year’s results, but we’ll see what happens in future years if they keep up with their contest.
1 It might seem that this should be 5.1%, but the right way to compute the compound difference is (1+0.216)/(1+0.267)-1=-4.1%.