Wednesday 21 January 2015

ManVsMarket: Should you listen to stock experts?

Early October 2014 Stock Smash decided to test whether stock expert advice is really helpful, so we created 2 S&P portfolio's; 1 with 10 stocks advised by an expert (of investorplace.com) and 1 with 10 random stocks. Today, it is 3,5 months later, so lets see how both portfolio's did. If you had followed the advice of the expert you would have gained a gain of 9.32%, compared to 8,20% gain in the random portfolio. So we congratulate the experts with their win.
However, this comparison might not be fair, because a closer look at the results tells us that the experts seem to have taken a much greater risk than the random portfolio. Hence, we might have expected a bigger margin between the expert portfolio and the random portfolio. Therefore, we at Stock Smash feel that this is a rather false victory for the expert portfolio. We will keep track of both portfolio's and hope that next period will indicate a more clear outcome.

The results of both portfolio's are shown in the table below.
        

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