Bogleheads® contests

Bogleheads® contests are typically annual events that take place on the where members take educated guesses (or throw darts) to forecast how the current year will end. There are two longstanding contests, a predictions contest and a hedge fund contest. Both of these contests do not follow the Bogleheads® investment philosophy, they are just a fun distraction looking at the potential follies of making predictions.

This article serves to both capture the results but also draw some conclusions from the results over the years.

The Bogleheads contest overview
The challenge is to forecast the closing price of the S&P 500 index at year end. Only one guess (no percentages and no changes).

Hedge fund contest overview
Members are asked to pick up to three stocks to go long and up to three to short. Equal dollar amounts are placed on each position, long or short. No trades during the year, except that you can elect at any time during normal exchange business hours to "freeze" a price for any individual position at that day's closing price, i.e. liquidate any position.

Takeaways from the results
There has been no clear, repeat winner in either contest. The unpredictability demonstrates the variation of year-to-year investor returns and reinforces the advantages of holding a diversified portfolio, which contains several asset classes.