Financial Experts Vs Orlando The Cat
Updated: Apr 11, 2020
This following story is published to provide a simple reminder that even experts can be wrong and there definitely IS such a thing as too much information.
Dumb luck is also very much a factor.
When I started actively managing my own money at the age of 18, one of the first things I did was turn on the TV so I could listen to experts make stock picks and provide analysis about where they thought the market was going. These experts all had incredibly fancy titles, worked at some of the most prestigious companies in New York and Chicago, and they all talked a lot. As someone who still had a lot to learn I enjoyed the various perspectives that these experts provided but the more that I learned on my own, and the more that I continued to watch these kinds of shows, the more I started to grow wary of certain parts of them. How much of what they are talking about and analyzing is actually there to help the average person when compared to professionals on Wall Street? We all understand that the stock market is extremely complicated and hard to predict, so analysis by people who are well educated on the topic can certainly be helpful so long as we keep things in perspective... With that in mind I want to introduce you to Orlando The Stock Picking Cat.
"This Cat Can Pick Stocks Better Than Most Investment Managers"
The article that followed the glorious headline you just read detailed an experiment that the UK Observer ran over the 2012 calendar year where a group of school children, investment professionals, and a house cat named Orlando were all given €5,000 to invest. Each quarter all participants could swap out any of their investments if they wanted to, or keep them all the same. While the investment professionals were in the lead through the first 3 quarters of the year, Orlando closed the year strong to overtake them.
While this experiment is clearly anything but scientific (ideally they would have run it for more than a year to get more representative data) it underscores an important point.
Be extremely careful with how you treat expert information. The best investment analysis is firmly rooted in data analysis of market fundamentals and human behavior, not what an expert thinks for any other reason.
Yes, experts can be right, but they can also be beaten by a cat.