Olmsted Posted February 6, 2014 Share Posted February 6, 2014 I was solicited to participate in a private stock-picking contest today. Essentially, 1-3 ideas, 1 year holding period, no trading, top performer wins. Stocks or bonds, no derivatives. It got me thinking about how the strategy to win a contest is so different from putting one's own money to work. Whereas in life you do not have to outperform all others, in this contest if someone else makes 105% in a year, you lose if you only make 100%. And there is no differentiation between the #2 (with, say 100% profit) and the last place guy (with, say, a 99% loss). The strategy here, then, is to pick just one security. Make it one with a ridiculously high upside, and of course with a concomitant high likelihood of going to zero or close to it. Ensure that the catalyst for it to go - either 1) to the moon or 2) to zero - happens within the time frame of the contest. Obviously not the way to invest in real life, but I cannot think of better ways to increase one's odds at winning such a contest. Thoughts? And, while we're on the topic, anyone have ideas that fit the profile I described? I only have one in my portfolio that fits the mold, the TMST senior unsecured notes. Bunch of trials later this year will either make them worth $83 or whatever is left in the trust (less than $10). They trade around $10-$12 now. Link to comment Share on other sites More sharing options...
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