Ordinary Housecat Beats Professional Wealth Managers in Year

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cosjef
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Ordinary Housecat Beats Professional Wealth Managers in Year

Post by cosjef »

More support for the "Random Walk."

Britain's The Observer has just concluded a year-long investment challenge which sought to determine if decades of experience gave seasoned stock market professionals any stock-picking advantage over a common household cat.

http://arbroath.blogspot.com/2013/01/ca ... -fund.html
jon-nyc
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by jon-nyc »

And even the cat didn't beat the FTSE all share, which returned 12.3%.
Balanthalus
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by Balanthalus »

Funny, but in clicking through to the longer article on the Guardian's site, I was disturbed by the following paragraph on some schoolchildren who also took part in the experiment.
Nigel Cook, deputy headteacher at John Hoddesdon School, said: "The mistakes we made earlier in the year were based on selecting companies in risky areas. But while our final position was disappointing, we are happy with our progress in terms of the ground we gained at the end and how our stock-picking skills have improved."
Despite this being an experiment designed to test whether there is such a thing as "stock-picking skill" that produced a result consistent with the hypothesis that there is no such thing, this teacher drew the opposite lesson (from a single quarter of decent performance). And he appears to be putting the idea in his students' heads that they possess this mythical ability. Appalling.
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by Tom_T »

Balanthalus wrote:Funny, but in clicking through to the longer article on the Guardian's site, I was disturbed by the following paragraph on some schoolchildren who also took part in the experiment.
Nigel Cook, deputy headteacher at John Hoddesdon School, said: "The mistakes we made earlier in the year were based on selecting companies in risky areas. But while our final position was disappointing, we are happy with our progress in terms of the ground we gained at the end and how our stock-picking skills have improved."
Despite this being an experiment designed to test whether there is such a thing as "stock-picking skill" that produced a result consistent with the hypothesis that there is no such thing, this teacher drew the opposite lesson (from a single quarter of decent performance). And he appears to be putting the idea in his students' heads that they possess this mythical ability. Appalling.
"Hey, teacher, leave them kids alone."
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gravlax
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by gravlax »

Don't kid yourselves. That's no ordinary housecat!

I've signed up for his newsletter already...don't be left behind.
jon-nyc
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by jon-nyc »

gravlax wrote:Don't kid yourselves. That's no ordinary housecat!

I've signed up for his newsletter already...don't be left behind.
Lol
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magician
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by magician »

What qualifies a housecat to be "ordinary"? I mean, how can they be certain that this wasn't an exceptional housecat? Clearly, we need more data.
Simplify the complicated side; don't complify the simplicated side.
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by nisiprius »

Comparing the cat to professional managers is fair enough. But, the FTSE All-Share is a cap-weighted index, and, if the "grid" used equal-size squares, then, reluctantly, I would suggest that the contest should be restaged, limiting stock picks to the FTSE 100, and benchmarking the cat against the FTSE 100 Equally Weighted Index.
Last edited by nisiprius on Mon Jan 14, 2013 4:51 pm, edited 2 times in total.
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by magician »

nisiprius wrote:Comparing the cat to professional managers is fair enough. But, the FTSE All-Share is a cap-weighted index, and, I reluctantly, I would suggest that the contest should be restaged limited stock picks to the FTSE 100, and benchmarking the cat against the FTSE 100 Equally Weighted Index.
Why this pathological hatred of cats? When will good enough be good enough?

;)
Simplify the complicated side; don't complify the simplicated side.
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by YDNAL »

cosjef wrote:Britain's The Observer has just concluded a year-long investment challenge which sought to determine if decades of experience gave seasoned stock market professionals any stock-picking advantage over a common household cat.
Some cats are better-prepared than others.
Image
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Jeff7
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by Jeff7 »

Balanthalus wrote:...
Despite this being an experiment designed to test whether there is such a thing as "stock-picking skill" that produced a result consistent with the hypothesis that there is no such thing, this teacher drew the opposite lesson (from a single quarter of decent performance). And he appears to be putting the idea in his students' heads that they possess this mythical ability. Appalling.
That's about all we got back in high school, though I don't think there was any "improve your skills" aspect to it. It was just an activity to do, aside of the academics in the Econ class. We also only played through a semester, so somewhere around half a year. Long-term investing was not presented a concept that I can recall.
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telemark
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by telemark »

Many professional fund managers now secretly employ cats, as insurance against falling too far behind the benchmark...
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by Fallible »

Balanthalus wrote:Funny, but in clicking through to the longer article on the Guardian's site, I was disturbed by the following paragraph on some schoolchildren who also took part in the experiment.
Nigel Cook, deputy headteacher at John Hoddesdon School, said: "The mistakes we made earlier in the year were based on selecting companies in risky areas. But while our final position was disappointing, we are happy with our progress in terms of the ground we gained at the end and how our stock-picking skills have improved."
Despite this being an experiment designed to test whether there is such a thing as "stock-picking skill" that produced a result consistent with the hypothesis that there is no such thing, this teacher drew the opposite lesson (from a single quarter of decent performance). And he appears to be putting the idea in his students' heads that they possess this mythical ability. Appalling.
Excellent point and I'm glad you looked into the whole article. This teacher did indeed draw the "opposite lesson" and that's disturbing, especially since this sort of personal finance teaching goes on in too many schools. In fact, I'd go so far as to say this IS the true, or more significant, story, since BHers at least are already familiar with randomness.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by FinancialDave »

Balanthalus wrote:Funny, but in clicking through to the longer article on the Guardian's site, I was disturbed by the following paragraph on some schoolchildren who also took part in the experiment.
Nigel Cook, deputy headteacher at John Hoddesdon School, said: "The mistakes we made earlier in the year were based on selecting companies in risky areas. But while our final position was disappointing, we are happy with our progress in terms of the ground we gained at the end and how our stock-picking skills have improved."
Despite this being an experiment designed to test whether there is such a thing as "stock-picking skill" that produced a result consistent with the hypothesis that there is no such thing, this teacher drew the opposite lesson (from a single quarter of decent performance). And he appears to be putting the idea in his students' heads that they possess this mythical ability. Appalling.
What I thought was funny was that the author called out the "Random Walk" as Burkiel's book, truly just a typo -- but :?:
I love simulated data. It turns the impossible into the possible!
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by Random Musings »

I heard a monkey outperformed the housecat in the same experiment. I'm sticking with the hot hands.

RM
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by Fallible »

magician wrote:What qualifies a housecat to be "ordinary"? I mean, how can they be certain that this wasn't an exceptional housecat? Clearly, we need more data.
I'd also like more data on Orlando "throwing" the toy mouse. I've never seen a cat throw anything in the common meaning of the word. Even if the mouse were first placed in the cat's paw, I don't think it's capable of a throwing motion, certainly not a deliberate one. How then did they get the cat to get the mouse to land on the numbers
grid? Who really did the throwing? (Sorry to be so literal here...)
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by nisiprius »

Fallible wrote:I'd also like more data on Orlando "throwing" the toy mouse.
Could "toy mouse" be a euphemism for "hairball?"
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by Fallible »

nisiprius wrote:
Fallible wrote:I'd also like more data on Orlando "throwing" the toy mouse.
Could "toy mouse" be a euphemism for "hairball?"
:thumbsup :D
Only Orlando knows.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by bertilak »

Fallible wrote:I've never seen a cat throw anything in the common meaning of the word.
Me either, but my cat sure can BAT things a good distance! I would not characterize that as throwing though.
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by baw703916 »

Is the cat going to eat cat food in retirement?
Most of my posts assume no behavioral errors.
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by Fallible »

bertilak wrote:
Fallible wrote:I've never seen a cat throw anything in the common meaning of the word.
Me either, but my cat sure can BAT things a good distance! I would not characterize that as throwing though.
Even if Orlando could throw, there's the problem of getting her to extend her claws to grasp the mouse long enough to throw. So, unless the spokeswoman for Orlando offers to tell us what really happened, that leaves as the most plausible explanation thus far Nisiprius's theory of throwing up a euphemistic "toy mouse." After all, the article makes no mention of what Orlando actually used to throw the mouse: her arm or her tummy muscles. :P

P.S. My guess is someone held the mouse to Orlando's paw and made a throwing motion.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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woof755
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by woof755 »

That's NO ordinary housecat...
"By singing in harmony from the same page of the same investing hymnal, the Diehards drown out market noise." | | --Jason Zweig, quoted in The Bogleheads' Guide to Investing
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by second-guesser »

I am not at all surprised that the cat won. I guess you bogleheads have not been keeping up
with past research about stock picking skills of animals.For a number of years Rusty , a 1600 pound longhorn steer competed against experts in the Fort Worth Telegram contest by dropping cow pies on a numbered grid in a pen . Each
square represented a local company or a major local employer. His first year he gained 62.9
percent vs. the experts 22.6 percent . Of course that was in 1997 during a bull market.
Ultimately he won four out of eight years of picks so I guess I will base my stock picks on my cat instead
of my cow in the future.

S-G
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by gotherelate »

"Bull market" - I get it. :wink:
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by Federal Agent »

baw703916 wrote:Is the cat going to eat cat food in retirement?
That's funny :mrgreen:
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by Mudpuppy »

Fallible wrote:
magician wrote:What qualifies a housecat to be "ordinary"? I mean, how can they be certain that this wasn't an exceptional housecat? Clearly, we need more data.
I'd also like more data on Orlando "throwing" the toy mouse. I've never seen a cat throw anything in the common meaning of the word. Even if the mouse were first placed in the cat's paw, I don't think it's capable of a throwing motion, certainly not a deliberate one. How then did they get the cat to get the mouse to land on the numbers
grid? Who really did the throwing? (Sorry to be so literal here...)
I see folks are not privy to having to dodge projectiles as one's cat decides to toss toys up in the air by grabbing the toy in its mouth and flinging. I also have one cat that grabs a toy in both paws, then leaps upwards while extending the front paws faster than the back paws then releases the toy, which replicates throwing sufficiently enough to require dodging by any hapless passer-by. In my household, the projectile dodging is followed closely by the bouncing off the walls tripping hazards. Maybe my cats are just hyperactive.
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by Fallible »

Mudpuppy wrote:
Fallible wrote:
magician wrote:What qualifies a housecat to be "ordinary"? I mean, how can they be certain that this wasn't an exceptional housecat? Clearly, we need more data.
I'd also like more data on Orlando "throwing" the toy mouse. I've never seen a cat throw anything in the common meaning of the word. Even if the mouse were first placed in the cat's paw, I don't think it's capable of a throwing motion, certainly not a deliberate one. How then did they get the cat to get the mouse to land on the numbers
grid? Who really did the throwing? (Sorry to be so literal here...)
I see folks are not privy to having to dodge projectiles as one's cat decides to toss toys up in the air by grabbing the toy in its mouth and flinging. I also have one cat that grabs a toy in both paws, then leaps upwards while extending the front paws faster than the back paws then releases the toy, which replicates throwing sufficiently enough to require dodging by any hapless passer-by. In my household, the projectile dodging is followed closely by the bouncing off the walls tripping hazards. Maybe my cats are just hyperactive.
But in Orlando's case, you'd still have to get her to first grasp the mouse. Have you ever tried to get a cat to deliberately do anything - unless it feels like doing it? It's like herding cats.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by Federal Agent »

May his eight other lives be inundated in cat nip, sardines and furball free :D
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Re: Ordinary Housecat Beats Professional Wealth Managers in

Post by baw703916 »

Federal Agent wrote:May his eight other lives be inundated in cat nip, sardines and furball free :D

With eight lives remaining, he'd better invest for a long time horizon. :)
Most of my posts assume no behavioral errors.
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