If you want to learn humility, challenge your readers to a stock-picking contest.
Three months into The Globe and Mail’s great Investing Club challenge, our Readers’ Portfolio continues to soar into the stratosphere.
As you will recall, the stocks in this portfolio were selected on the basis of public input. Back in the spring, we invited you to send us your top three stock ideas for the year ahead. We then selected the dozen most popular picks from the more than 500 submissions we received to make up the Readers’ Portfolio.
We didn’t know what to expect from this voice-of-the-people approach. Would the portfolio benefit from the wisdom of crowds? Or would it suffer from the irrational whims of mom-and-pop investors?
The evidence to date comes down firmly on the side of crowd-sourced wisdom. Our readers are proving to be an unusually intelligent bunch. Since we started counting on March 13, their picks have gained an average 15.4 per cent.
This trounces the total return of 2.9 per cent from the S&P/TSX Composite over the same period. It even beats the red-hot S&P 500, which has managed to generate only 10.2 per cent in Canadian dollar terms.
And what of The Globe’s Hot List? As you may also recall, we thought it would be interesting to see how the Readers’ Portfolio stacked up against a roll call of the best ideas from those of us who write about investing at The Globe.
Unfortunately for the self-esteem of pundits everywhere, this exercise hasn’t turned out quite the way our egos would have liked. The 11 stocks in the Globe Hot List are up an average 5 per cent in three months.
That is nothing to sneeze at – hey, it beats the S&P/TSX Composite – but our performance fades into the background compared with the glory that is the Readers’ Portfolio.
Despite the daily humiliation, those of us at Globe Investor are managing to soldier on – thanks for asking – and keep hoping to narrow the gap with readers before the Investing Club challenge winds up on March 13, 2024, and we declare a victor.
How the contest turns out will have a lot to do with the current mania for anything related to artificial intelligence (AI).
Readers were uncannily accurate in foreseeing this trend, particularly when it came to their selection of Nvidia Corp., the maker of computer chips and graphic cards used in many AI-related applications. As excitement over AI has mounted in recent weeks, Nvidia has been one of the market’s biggest winners.
Readers have also done spectacularly well with two other tech-sector picks: Microsoft Corp. and Shopify Inc. Both have been major winners over the past three months.
Maybe the market’s enthusiasm for AI and tech will keep on swelling. If so, the Readers’ Portfolio will go on to even greater things.
However, some payback may be in order. If it maintains its current trajectory, the Readers’ Portfolio is on track for an annual gain of more than 60 per cent. That is a pace that even the greatest investors in history have been unable to maintain.
Those of us at Globe Investor have to hope that our affection for real assets will be rewarded. First Quantum Minerals Ltd. and Brookfield Infrastructure Partners have been solid winners for us, but Canadian Natural Resources Ltd. and Dream Industrial REIT have sputtered.
Two of our more speculative picks – fuel cell maker Plug Power Inc. and entertainment conglomerate Warner Bros. Discovery Inc. – have also disappointed. The good news, if you can call it that, is that both are now slightly less awful than they were a month ago.
We acknowledge that “slightly less awful” is not the most compelling description for any investing performance. However, like fund managers everywhere, we are becoming adept at looking on the bright side. The problem, we think, isn’t that we have been so bad but that readers have been so good. Hats off to you. But don’t count on victory just yet.