Olympians vs The Biggest Losers

You wouldn’t call it “sporting” would you?

If you selected the world’s top 10,000 meter runners and pitted them in a 10K running race against a slew of prospective contestants in the hit television series, The Biggest Loser, we know what the results would be, right?

The overweight contestants from the hit reality show would get lapped by the Kenyan and Ethiopian gods of running—over and over and over.

But how about this?

Some of the world’s top financial minds run actively managed mutual funds.  Their jobs are to research  companies, keep their fingers on the pulse of the economy, and ultimately make money for the people buying their funds.  The fund managers make this money for others through the nimble buying and selling of stocks within their respective funds.  The men and women running these funds are like champion runners.

What if we made these fund managers race against the biggest financial losers?

Wouldn’t it be interesting to see how far the top finance professionals could pull away from the investment world’s bottom dwellers?

To set this race in motion, I’ll need your help.

  • Give me the name of the best American stock based mutual fund you know (in your view).  My hope is to collect 10 different “top” funds from 10 different people.
  • I’m also looking for 30 of the worst American stocks you can think of. Each person can give me names of 1 or 2 “bad” stocks, but they must be trading above $15 a share.

Once I get your feedback, I’ll pit the 10 top selected mutual funds against the 30 “lousy” stocks to see what performs better: the great mutual funds or the basket of crummy stocks.
I’ll post the results of the profit “race” on my blog periodically, tracking performances using “Smartmoney’s” online portfolio tracker.

There will be no “end date” to this race.  We’ll track it as long as I keep this blog active.

So…I’m looking for:

  • Great American mutual funds (stock based funds—not bond funds)
  • Lousy” American stocks trading at $15 or above (per share)

I’ll compile the holdings from your suggestions, (please add them to ‘Comments” at the top of this post) and we’ll let the race begin!

(Note—Total returns will count, including dividends, but I’ll put dividends into cash instead of reinvesting them.)





Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I’m happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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17 Responses

  1. Jenn T says:

    Andrew, I'm definitely going to follow this. If the crappy stock grouping keep up with the best pros I'd laugh. But I don't think they will. I get the feeling you think they might. For the Kings of crappy, ugly, smelly stocks–how about AIG and Nortel Networks?

  2. Jenn, nice job on picking two terrible businesses! Nortel Networks trades on the U.S. and Canadian markets, but it trades about about 30 cents, which is below the $15 per share arbitrary cut-off I selected (Don't ask me why I chose a $15 cutoff–just a gut thing)

    But AIG, which trades at about $30ish would work. Again, there might not be much of a difference between the two because AIG's stock had a reverse split–but let's go with AIG. Its earnings per share (a measure of profits) is roughly minus $90 per share. I don't think I've personally seen anything that ugly before.

    Great job—AIG will be among our 30 bad picks. Let me know if you come up with another trading above $15 per share.

  3. OK–so for "Bad" stocks we have AIG so far.

    Defining what's "Bad" is up to you. I'll just try to make sure the stocks trade above $15 per share when we compile them.

    Thanks!

  4. Keith says:

    Nice idea Andrew – definitely looking forward to following this!

    Here's my pics:

    The Good: Vanguard Total Stock Market Index Fund (VTSMX)

    The Bad: American Funds New World A NEWFX

    The ugly: Frontier Microcap (FEFPX)

  5. Jessie says:

    OK–here's a random one Andrew. I went to yahoo finance and put in the ticker symbol "A" which was Agilent Technologies. It has performed pretty well. So i went with the ticker AA–which was Alcoa. Its stock price is the same as it was in 1995, I think. Perhaps you can use that one. Good luck to the random monkey account vs the pros.

    I'll see if I can find a top mutual fund to throw in the mix.

  6. Jessie says:

    I just googled "Top Funds for 2010". Here's one you can go with–I just quoted this off an article I saw:

    FMI Large Cap (FMIHX), which is the top-scoring large-blend fund in the U.S. News rankings, likes to say that only his team's best ideas will make it into the fund's portfolio. And he means it: FMI Large Cap generally owns just 25 to 30 stocks at a time. "We're not big believers in sheer numbers of names," says English.

    I hope you get enough interest in this because this "race" of yours could be pretty entertaining.

  7. Thanks Keith and Jessie:

    Keith thanks for participating! I'm going to see if I can compare 30 stocks (as a group) with 10 actively managed mutual funds (as a group)

    See if you can come up with two stocks that we could use (representing the "bad" you alluded to) and then at least one actively managed mutual fund–but not an index fund.

    I look forward to your selections. Thanks again!

    Jessie, we'll use Alcoa (as you suggested) and for the actively managed fund, we'll use the FMI Large Cap (FMIHX).

    Thanks for this!

    Andrew

  8. Peter says:

    After searching alphabetically on yahoo finance, here are my picks for the stocks: (JNPR) Juniper Networks and (LLY) Eli Lilly & Co. Both have had their ups and downs, but over the past decade they haven't done well.

    As for the mutual funds, I employed the same crap-shooting technique and googled "best mutual funds" and came up with an article from CNN Money and took the top two on their list: (AMRMX) American Funds & (SSHFX) Sound Shore Fund.

    It will be interesting to see how all this pans out over the long term. It's a provocative experiment.

  9. Keith says:

    From the American Funds New World A (NEWFX), go with (OGZPY) Gazprom and (SAN) Banco Santander SA.

    For the mutual funds, how about American Century Heritage Inst (ATHIX)

  10. Great stuff Keith! Thanks!

    So for the stocks we have: AIG, Juniper Networks, Banco Santander, Eli Lilly and Alcoa

    For the actively managed mutual funds we have: 1. American Funds New World A 2. American Century Heritage Inst 3. American Funds American Mutual A 4. FMI Large Cap, and 5. Sound Shore Fund

    So we need 25 more stocks trading above $15 per share (how about just picking them randomly?) and we need 5 more actively managed mutual funds (for these, let's go with those that have great reputations only)

    Thanks again everyone!

  11. Linda says:

    Hi Andrew,

    My suggestions for managed mutual funds are Vanguard Windsor II (VWNFX) or T. Rowe Price Equity Fund (PRFDX).

    My suggestions for the "lousy" list are Kimco Realty Corp. (KIM), NutriSystem Inc. (NTRI), Gamestop (GME) and Zions Bancorp (Zion).

    For a future project, Andrew, I would love to see you track companies that rank as the most ethical and the most unethical. It would be fun to see if the "good guys" win – or, if crime pays!

  12. Thanks Linda,

    That's a great idea about the ethical versus non enthical race. It has been somewhat done before with mutual funds, and the non ethicals win out. But will they always? And by whose ethics are they chosen? Interesting questions to ponder.

    And you gave some super selections.

    Thanks!

    Andrew

  13. Joe Chan says:

    Here are some managed funds that I think have done quite well over the years; Dodge and Cox Stock Fund, Wellington Income, Vanguard Health Care, Fidelity Puritan, Fidelity low price stock, Legg Mason Value Trust, Fidelity Select Energy.

    Some bad stocks: Lucent, Citibank, Sun Microsystem, AOL-Time Warner, ( many tech stocks except for Google and Apple)

  14. Joe Chan says:

    @Andrew Hallam

    I think Altria (sp?) the former phillip-Morris company stock has done quite well and pays a nice dividend eventhough it makes its money selling cigarettes.

  15. Hey Andrew – great "contest"!

    Whoa, can't think of many over $15. But here goes….

    How about Ciena (US:CIEN, down a bunch since the tech. boom) and ATC Technology Corp (US:ATAC-Q, logistics and drivetrain products manufacturer). Thoughts?

  16. Hey Joe,

    If you were a financial advisor, you'd be a good one. The funds you picked have generally low expenses and low turnover. I guess what I need now are more stocks. Because this $15 hurdle could be tough, perhaps if you want to add a few more stocks without the $15 minimum, we should go for it. I just didn't want a slew of 23 cent stocks that are likely headed for the abyss. I really look forward to this race Joe. And as strange as it sounds, I think the 30 lousy stocks will keep pace over time.

    Financial cents:

    Thanks for the stock picks. I'm definitely going to add them to the "team". Thank you!!

    If you feel like "broadening" this and going for some cheaper stocks, go for it! As I mentioned to Joe, I think the lousy stocks will keep pace with the best funds (and the indexes) based on no expense ratio drag, and the randomness of the market in general. I do believe that there are people who can pick winning stocks, but I also think they are so rare that we might not be able to find them by looking backwards at their performances. Plus, most fund managers will have an expense drag based on their expense ratios, and trading fees from portfolio turnover. That's why (I think) even just sitting tight on 30 stocks will keep pace with the best pros. For 10 years, our investment club has beaten the pants off most of the pros and the indexes. But I know that we aren't anywhere near as smart as the pros, further enhancing my belief in the randomness of markets and the role that luck plays. Give me a few more stock picks if you can–then your thoughts. Thanks!

    Andrew

  17. Dear readers:

    Thanks for putting together such a great list. So far, this is what we have:

    Great Mutual Funds

    1. American Funds New World A

    2. American Century Heritage Inst

    3. American Funds American Mutual A

    4. FMI Large Cap

    5. Sound Shore Fund

    6. T. Rowe Price Equity Fund (PRFDX).

    7. Dodge and Cox Stock Fund

    8. Fidelity Puritan

    9. Fidelity Select Energy.

    10. Legg Mason Value Trust

    This rounds out our "A" list of super mutual funds. I have to admit, it's an amazing list. Because you contributed more than 10 funds, I had to shave a couple of them. If you're wondering which funds I chose to shave, they were the Vanguard Funds. Vanguard is a non profit fund company so I figured we'd leave them off the top 10 list. We want to see who's making big profits for their business, and whether they can still make nice profits for their parent company (ie Fidelity, T. Rowe Price etc) while beating a handful of stocks created by a bunch of amateur investors putting forth the lousiest collection of stocks they can find.

    We need 30 of those "lousy" stocks. These are the ones we have so far. Your contributions are welcome (in fact, I need them!) Thanks! We're halfway there. Only 15 stocks to go:

    1. AIG

    2. Juniper Networks

    3. Banco Santander

    4. Eli Lilly and Alcoa

    5. Alcoa

    6. Kimco Realty Corp. (KIM)

    7. NutriSystem Inc. (NTRI)

    8. Gamestop (GME)

    9. Zions Bancorp (Zion)

    10. Lucent

    11. Citibank

    12. Sun Microsystem

    13. AOL-Time Warner

    14. Ciena (US:CIEN)

    15. ATC Technology Corp (US:ATAC-Q)

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