Overall Results

Four weeks ago I read an article about if women are better investors than men, so I decided to play a week investment game with my girlfriend. The game turned out to be more about the fact that I had some investment knowledge and my girlfriend didn’t. However, the results were shocking to me. My girlfriend officially won the game with an overall return of +9.05%. My return was a good +7.77% but not good enough. The stock that sealed the victory was her pick of Coach (COH) the luxury goods maker which gave her a +35% gain in 3 weeks. I was incredibly surprised at this pick especially when the economy is in such bad shape. I didn’t think a luxury bag company could be going up but shows how much I know.  The two stocks that helped me at least stay in the game were OIH (+14.5%) and ATI (+7.19%). Unfortunately, Oil is running back up and at least I saw this was going to happen to profit from it. Sadly I filled up last night and gas prices went up 4 cents in about 5 days. Allegany Tech was up 7% in one week which helped narrow my girlfriend lead along with her losing 3% in Target.

Final Thoughts

I think some key elements really played a role in the overall success of the game that should be investigated:

1. Prior experience was no guarantee of success – Just because I have traded stocks for years really did not give me a clear advantage over my girlfriend who has never purchased a stock in her life. My paradigm for investing said there was no way Coach could perform well in this economy and that made me miss out a fantastic opportunity. My girlfriend had no preconceived notions about investing and gave her more freedom (and ultimately, the win). So have an open mind when investing for yourself!

2. Importance of understanding the overall market trend - Had we played this game in Oct of 2008 instead of May-June 2009, both of us would have been down probably in the double digits. It must be understood that since the March 9th low, the market has been in an upward trend and during our investment game the S&P 500 was up about 6%. That means I could have invested in the SPY (S&P 500 Index ETF) and been up about the same as what I did with all of this investment maneuvering. It would have been less work and less agony with about all of the upside. So if the market (or even real estate) is in an uptrend, it’s easy to make money, when it isn’t that is when you have a real challenge. If you don’t believe me ask all the people in 1999 who quit their jobs to become full-time day traders.

3. This wasn’t an Investment Game - This was a trading game, pure and simple. We took a short time frame and played a game for fun. Trading off of what you like as an investment theory is a dangerous idea in my opinion. For a real investing period of like 20-40 years, I think diversifying in equities with Index funds, no-load mutual funds and few stocks picks is the right way to go. I will talk about my investment strategy in another post but just understand my girlfriend and I were both flat out lucky!

Please note: there is no recommendation to buy or sell here and ModernMoneyBlog.com will not be held responsible for any action on your part. This is for informational purposes only.

The Rich get Richer. My girlfriend was beating me by about 6% last week and now is beating me by 8%. This is getting depressing now and I think the emotional aspect of this is really getting to me. Now I’m not sure if I should continue to buy stocks that have economic factors influencing their movement or if I should just try to win the game. With only 1 week left in the game this is it and I think she has won. I might make our 4 stocks an index of sorts and track it even after the game is over just to see what happens. Anyways here are our results and our picks for the last week. I don’t think I’m going to win the game!

Fourth Week Picks:

Me – Buy ATI (Allegheny Technologies Inc) at $40.36

My analysis – I think this metal and basic materials company will do well in an improving global economy.

My GF – Buy TGT (Target Corp) at $40.95

My GF’s analysis – She thinks people enjoy going to the stores more than a crowded Wal-mart and thinks this store will benefit as the economy improves.

Please note: there is no recommendation to buy or sell here and ModernMoneyBlog.com will not be held responsible for any action on your part. This is for informational purposes only.