Does having a Harvard MBA make someone a better stock picker?
Does having a Harvard MBA make someone a better stock picker?
We think not!
We’re now two weeks into the
TradingMarkets/Playboy 2006 Stock Picking Contest and 4 of the 10 Playboy
models are beating 11,705 out of the 11,739 equity mutual fund managers in the
United States. Yes, that’s right, 4 of the Playboy models would be ranked in the
top 1% of all mutual fund managers if Morningstar tracked their performance!
Here are the highlights of the contest as of Monday, January
16:
1. 9 out of the 10 contestants are beating the S&P 500.
2. The average performance of all ten contestants is +6.45%,
more than double the S&P 500.
3. Half of the contestants are beating the S&P by a 2-1
margin.
4. Morningstar lists 11,739 US Stock Funds. The average return
to date is 3.50%, well below the average return of the Playboy contestants. Only
12 funds out of 11,739 funds are outperforming our contest leader Christine Smith
(+10.05), and our four best performing contestants rank in the top 34!
5. Here’s how they would rank if the Playboy models were included in the
Morningstar list:
Christine Smith +10.05% 13th out of 11,739 managers
Courtney Culkin +9.87% 14th out of 11,739 managers
Deanna Brooks +9.54% 18th out of 11,739 managers
Amy
McCarthy +8.78% 34th out of 11,739 managers
6. One of the top performing stocks this year is WebMD
(
WBMD |
Quote |
Chart |
News |
PowerRating).
This was one of
Pilar Lastra’s top picks. She chose it because she’s a “hypochondriac” (her
words, not ours), and it’s one of her favorite sites. Her reasoning for
selecting the stock is obviously as good (ok…better) than the thousands of
money managers who rely upon PE ratios, cash flow projections, and all the
dozens of other financial tools which have absolutely no statistical validity to
prove they can beat the market averages (or the Playboy models!).
So what does all of this tell us? Well, obviously Harvard won’t agree but it
clearly says you don’t need an Ivy League MBA to pick great stocks. Famed money
manager Peter Lynch, who successfully ran Fidelity Magellan’s Fund for years,
used to preach buying companies that you know. And that’s what our smart
contestants have done-they have selected companies they know. And two weeks into
the contest, this strategy has proven to be the best buy and hold strategy of
the year. We’ll see what the rest of the year brings…but we expect more brains
to go along with the beauty.
Ashton Dorkins
Editor-in-Chief