2018 Stock Picking Contest: 3Q Results

\"\"Three quarters of the ABL Stock Picking Contest are in the books, and we\’re entering the final stretch. If you\’d like to heighten the drama, you can go back and read the Q1 and Q2 results first.

Results are YTD through quarter end and include dividends paid. I’ll try to tighten up the QC process before year-end to make sure all results are spot on (if you find any errors, let me know). Since google finance has lost a lot of functionality, my spreadsheet has become less of an automated affair. Perhaps, in the grandest tradition of John Henry, we need to pit my mostly manual spreadsheet against PK\’s mighty mathematical machine? Stay tuned.

With the S&P return around 10% YTD, we\’re averaging about 1.5% as a group. Yikes. The good news is that most of us are still beating my dog. The bad news is that my 7 y.o. son is crushing the entire field save one. Because it appears he will be on the medal stand, I thought it would be helpful to have his commentary on your picks. He\’s read the description of each business, and you can find his thoughts below.

Mr. Smith

  • ConocoPhilips COP 42.05%
  • Darden Restaurants DRI 16.97%
  • Alphabet Inc. GOOG 13.84%

Total 24.29%

Putting up this type of return with large caps is certainly impressive. However, I\’m starting to wonder how much work went into these picks. I\’m able to observe Mr. Smith\’s sharp analytical skills and keen attention to detail on a weekly basis as we compete in a fantasy football league. As he regularly starts players who aren\’t actually playing in games, I\’m starting to suspect that this stock picking entry is not much more than throwing darts.

My 7 y.o. son\’s commentary:
COP sounds like a \”decent\” business, but he\’s really bullish on DRI (\”I like Italian food and steak\”) and GOOG (\”We use google every day, and YouTube is the best!\”).

My 7 Year Old Son

  • Southwest Airlines LUV -4.57%
  • Target TGT 36.60%
  • Costco COST 26.33%

Total 19.45%

I was mildly interested in Costco at the start of the year, but I was pretty sure Target was going to sink this entry. Picking stocks is hard.

My son\’s commentary:
He\’s fairly certain this will be the winning entry. His Lego purchases alone could be powering Target\’s impressive return, and Costco\’s pizza continues to please. Southwest Airlines is not pulling its weight, but he\’s planning on investigating that personally. When I commented that picking stocks is hard, he said, \”No it\’s not.\”

DQYDJ

  • Skyworks Solutions Inc SWKS -4.45%
  • Gilead Sciences Inc GILD 9.32%
  • Express Scripts ESRX 26.70%

Total 10.52%

In any contest – and in life – it\’s always really important to define your goal. The natural goal for this contest was to win it, though the less ambitious might just hope to avoid defeat by a dog.

PK, however, had the discipline to set his own goal: \”I was never worried about winning. I simply wanted to crush Nelson like a bug. Most of my time online is focused on demonstrating my superiority over him, and this contest continues that trend.\” When reminded that fortunes can change and Nelson may someday make him regret these unkind words, PK smiled softly and said, \”I\’m not worried.\”

My son\’s commentary:
SWKS has a cool name but is way too complicated a business. GILD, which makes medicines for \”areas of unmet medical need\” sounds awesome – he feels that serving unmet needs is a really great business strategy. He liked that GILD and ESRX both help people, and he concluded that PK must be a really nice person for picking them. He was saddened to learn that was actually far from the truth.

Mr. Tako Escapes

  • AerCap Holdings AER 9.27%
  • Amgen Inc. AMGN 20.47%
  • LyondellBasell Industries LYB -4.99%

Total 8.25%

While the stated objective of this contest is to crush your enemies, the actual objective is to provide me with potential stock investing ideas. And on that count, Mr. Tako is clearly leading the pack. I am still exchanging coy glances with AER, and LYB is on my radar as well.

My son\’s commentary:
AER sounds like a great business because it\’s \”like rental cars but with airplanes\” and he\’d like us to use it on our next vacation. AMGN, whose product names are \”terrible\”, and LYB (\”Do people even use chemicals that much?\”) both earned really unenthusiastic shrugs.

Mike

  • Federal Realty Trust FRT -2.70%
  • Alphabet GOOGL 14.63%
  • Paychex PAYX 10.14%

Total 7.36%

I still can\’t figure out how this entry is beating mine.

My son\’s commentary:
FRT did not sound promising to him (\”Except for Target and Costco, do people go to stores anymore?\” Yes, son – there\’s also Walmart). GOOGL, like GOOG, is great, but \”Why do they have two stock things, and why did one do better than the other, and why did Mr. Mike choose this one?\” Great questions, all. After multiple explanations on what PAYX does, he joined many others by saying, \”I just don\’t get it.\”

My Money Wizard

  • Vanguard Total Stock Market ETF VTI 10.01%
  • Vanguard Growth ETF VUG 14.86%
  • Vanguard Total International Stock ETF VXUS -3.79%

Total 7.02%

In lieu of my own comments, I will yield to my son and Bamble the Dog. Their commentary below says it all.

My son\’s commentary:
See DGI below.

Asset-Based Life

  • General Electric GE -33.73%
  • BP BP 13.92%
  • Sony SNE 33.78%

Total 4.65%

One side benefit of this contest is the missus is actually paying attention to our stock ownership (I still own BP and GE). However, that attention seems solely focused on GE: \”You\’ve lost a LOT on it!\” But therein come many wonderful lessons: the importance of a fully diversified portfolio, the value of weighting your punts appropriately (BP has more than covered GE, which is both nice and a little scary), and a reminder to keep things in context (\”Hahaha – you think losing 33% is a lot?\”). Next year I may actually invest in Bamble\’s picks just to raise the stakes and excitement for her 🙂

My son\’s commentary:
(On reading about GE\’s business) \”They are trying to do way too many things. If one business gets hard, they will stay up all night working on it, and then the next day the other businesses will start to mess up.\” I could have used that analysis a while back. BP, like COP, is \”decent\”, but if they\’re both in the oil game, \”Why is Mr. Smith\’s pick so much better than yours?\” Quiet you. SNE is \”really good because people love video games and movies.\”

Dividend Growth Investor

  • Vanguard High Dividend Yield ETF VYM 3.63%
  • iShares 20+ Year Treasury Bond ETF TLT -5.62%
  • SPDR Gold Shares GLD -9.55%

Total -3.84%

If being a contrarian always worked out, everyone would do it. I was hoping this entry would be a player, but it seems like there\’s a low ceiling on it for this year. And that ceiling is in a root cellar somewhere.

My son\’s commentary:
(On learning that My Money Wizard and Dividend Growth Investor didn\’t pick individual stocks, but rather ETF\’s, which were a basket of stocks) \”But this is a stock picking contest, not a basket picking contest! They should be disqualified.\”

Financial Uproar aka Canadian Dividend Investing

  • Argan Inc. AGX -4.29%
  • Morguard REIT MRT.UN -8.19%
  • Just Energy JE -21.93%

Total -11.47%

Nelson\’s making lemonade out of this year\’s crop of lemons. He thinks he may already have his picks for next year, and he\’s preparing his victory parade for his first ever inter-species stock picking showdown. Let\’s just hope Bamble doesn\’t ruin his plans with a 4th quarter surge.

My son\’s commentary:
\”These picks just don\’t sound very interesting.\” It\’s OK, son. Nelson wouldn\’t have it any other way.

\"\"Bamble the Dog

  • Motorcar Parts of America, Inc. MPAA -6.09%
  • Chubb Limited CB -7.25%
  • Eldorado Gold Corporation EGO -39.73%

Total -17.69%

Bamble is one of the most good-natured dogs on the planet, and he’s taking his poor performance in stride. Recently, My Money Wizard stopped by for a little friendly ribbing. Bamble laughed and replied, “I\’m certainly getting drubbed, but I wouldn\’t have it any other way. Sure, I could have played it safe and gone with index options, but, like Teddy Roosevelt\’s ’Man in the Arena’, I would rather fight hard and lose than sit on the sidelines and let life pass me by.\”

Humbled by these comments, My Money Wizard is seriously rethinking his approach for next year\’s contest. Reports also surfaced that he was starting electric guitar lessons and had formed a band.

My son\’s commentary:
MPAA is risky because \”your car doesn\’t break down that much.\” Insurance, at least for someone with a 7 y.o.\’s command of math, sounds incredibly risky: \”If they mess up, all of their money will be gone!\” EGO caught his interest because \”gold is really valuable\”, but, as he saw their performance, he did ask one key question: \”Are they any good at finding gold?\”

Steveonomics

  • Alibaba BABA -6.60%
  • Starbucks SBUX -0.26
  • OHR Pharmaceutical OHRP -89.89%

Total -32.95%

The silver lining of this quarter is that Steve no longer needs to blame OHRP for scuttling his entry. Any one of his picks can claim credit for that.

My son\’s commentary:
BABA sounds a lot like Amazon, so he likes it. SBUX is less favored: \”Coffee is yucky, and buying overpriced coffee (not sure where he learned that…) is stupid.\” OHRP didn\’t get much analysis, because on seeing its price, my son just started laughing and could only ask, \”What happened???\” Believe me, Steve wants to know the same thing.

 

Thanks to everyone for a wild and entertaining ride. I am sure the final quarter will provide a thrilling finish, and we may even draw a finance lesson or two.

For any of those who sat on the sidelines this year but now draw inspiration from Bamble\’s words, let me know if you\’d like to join the 2019 contest. Bloggers and civilians are equally welcome, and you clearly don\’t need any special skill at picking stocks. I definitely want to extend an invitation to Tawcan, because I think I could trick him into helping with the quarterly calculations he\’s a great investor and seems like a really good guy. If you have any other referrals let me know.

Good luck to everyone as we stumble to the finish line.

 

 

7 thoughts on “2018 Stock Picking Contest: 3Q Results”

  1. Hah! You caught me in a bit of a bad blip this quarter when my stocks were down! Well, at the very least I’m still beating the dog. There’s a little bit of dignity in that. 🙂

    The game isn’t over yet! There’s still a quarter to go!

    Seriously though, Mr. Smith is going to be really damn hard to beat with his ConocoPhillips pick. That’s one of the biggest gainers for the year. We might be able to call this one right now.

    Mr. Smith caught the rocket ship this year!

    1. Mr. Smith is certainly sitting pretty, but a quarter is more than enough time for things to upend! Few of us have picks that could see truly dramatic moves in short order, but I’m not counting anyone (except Steve and maybe Bamble) out yet.

  2. Hey Paul thanks for the entertaining commentary. If you’re not careful you’ll be overrun with investors in 2019 trying to sneak some free analysis out of your son. Maybe that’s a good monetization plan 😉

    1. He’ll need more of a track record before he can start charging a premium. And let’s hope he gets crushed in the contest next year – it’d be a curse for a youngun to think he’s a great stock picker when his analysis has been on the thin side. Too many people learn that the hard way with real money! Thanks for the note

  3. Costco’s pizza is garbage. Their hot dogs, on the other hand, are heaven in my mouth.

    Also PK might be beating me in this silly contest that definitely doesn’t matter, but I’ve got him right where I want him in fantasy football. I can further pad my lead on him with a head-to-head victory this week. Will he cry after? Here’s hoping.

    1. We love the garbage pizza, and when we get tired of it, we shift to hot dogs. When we tire of those, more delicious garbage pizza. It’s one of life’s most beautiful cycles.

      Fantasy football is indeed a much more challenging endeavor than picking stocks. I hope you and PK enjoy your little powder puff game this weekend because my steamroller, while slow to start, is soon to flatten you both.

  4. Ha, I suck at picking ETFs. I should perhaps stick to picking stocks.. I think that 2019 should definitely be the year of the permanent portfolio after so many years of meh returns though ( mean reversion etc) 😉

Leave a Comment

Your email address will not be published.