An ode to stock picking

Unhedged

The episode explores the high-stakes 'dark art' of stock picking through the results of the Financial Times' recent stock picking competitio

Key takeaways

• The player 'Woody 5.0' plummeted from 2nd to 387th place due to frantic, non-strategic trading near the end of the competition.
• Winner Swapnil Ngole utilized fundamental analysis on SaaS stocks like Microsoft and Adobe during a period of significant price dips.

Main topics

• FT Stock Picking Game results
• Active vs. Passive investing trends

Notable quotes

Picking stocks is the darkest of dark and most difficult arts.

Conclusion

While active stock picking remains a romantic and potentially lucrativ

Transcript preview

Speaker 2 (0:00) Picking stocks is the darkest of dark arts. So dark, in fact, that it's probably best treated as a game. By far, the easiest way to invest in stock markets is to spread your bets and keep your costs low. That's not investment advice. It's just kind of common sense. So a lot of investors, retail and professional, just buy dead simple funds and products that track big indices and national markets. That's relatively new, though. Back in the day, the noble path was to identify individual stocks that you thought were onto a winner and bet on them. It's old school, and for many fund managers, it's been a road to admiration and riches. But man, it is hard. Luckily, the FT has an online game where you can pretend to be a fancy stock picking investor. It's like being a hedge fund manager, but without the Ferrari or the thousand euro loafers. So today on the show, how have our readers stacked up? And in real life, is this whole thing really worth it? This is Unhedged, the markets and finance podcast in the Financial Times. I'm Katie Martin, a markets columnist in the control room of FTHQ in London. Joining me down the line, fresh from topping up his levels of Britishness over here last week, is the big fella, Rob Armstrong. Rob, say hello. Speaker 2 (1:24) Hello. That's me with Speaker 1 (1:26) my Britishness levels topped up. Speaker 2 (1:29) You sound much cleverer. But also with me in the studio is the affable Nathan Brooker from the FT's money section, which, unlike bloviators like me and Rob, actually helps people figure out what to do with their money. Speaker 3 (1:43) I wouldn't go quite that far. Speaker 2 (1:46) Nathan, you're doing God's work with the money section of the paper and indeed with being here today. Thank you very much. So the stock picking game. I have a love-hate relationship with the stock picking game. Mostly hate. So back in the day with this game, when it was a bit more analogue, you pick five stocks, you bet on them or against them, and you leave them for a whole year. At the end of that period, you see who's very clever and who's a giant idiot. It Speaker 3 (2:12) was open Speaker 2 (2:12) to FT people and to everybody else. Anyway, I was the giant idiot. I came almost last. which was a little bit embarrassing. Anyway. My Speaker 1 (2:21) experience is broadly similar. Like the only way I can have any chance at doing well in that contest is just by piling on the risk, which means it's like death or glory, right? Either I come in almost last or almost first. Speaker 2 (2:36) Yes. And Speaker 1 (2:37) there's nowhere in between. A strong indicator of my lack of skill. Speaker 2 (2:40) Yes. Well, I chose death. Anyway, there's a whole other story. Nathan, the game has been sexed up, man. It's got all new bells and whistles. Tell us about it. Speaker 3 (2:52) So the last game, as you rightly say, was a pretty rudimentary affair. You pick five stocks. You could go short or long, but that's about it. This new game, we started it in June. It's much more hands-on. You can pick between five and 20 stocks. You can vary the weights, but crucially, you can trade as many times... as you like. So if the last game was a bit like a marathon, the new game is, it's not exactly a sprint, it's more like a kind of high-octane egg and spoon race. Speaker 1 (3:24) And Speaker 2 (3:25) so you just put the piece out the other day about how this competition went. I think it's quite an interesting insight into the real-life experience, actually, of being a fund manager. Because as you say, it runs for, what was it, nine or ten weeks? Speaker 3 (3:37) Eight or nine weeks, depending on the season, yeah. Speaker 2 (3:39) Yeah. And you can put in it... Any stocks from a bunch of developed markets? Yeah, all Speaker 3 (3:44) the major markets from America, Europe and FTSE 250. Speaker 2 (3:48) Yeah. And how many people played? Speaker 3 (3:50) 13,000 people signed up. Speaker 2 (3:54) So how do people do? What do people bet on? What do they bet against? And where do people manage to make themselves look almost as silly as me? Speaker 3 (4:02) Well, this time you can't go short. You can only bet long. Right. So that removes a big reason why you came 1,360th out of 1,364th. Speaker 3 (4:18) Sorry, I thought it would be journalistically remiss of me not to bring up the actual numbers from the 2024 competition. Speaker 1 (4:25) But you did dominate those other four people, Katie. Speaker 2 (4:28) Yeah, I really put a shift in. But so you wrote about the results of this thing in the weekend section the other day, and you led on the story of a player of the game called Woody 5.0. This is a very cautionary tale, right? So tell us what happened to poor