If your mutual fund manager, despite a bull market for much of 2014, has let you down, take heart. Sometimes, it needs luck as much as pluck to beat the indices.
Or you could try random investing – by throwing darts at a decent list of stocks from any index, and investing in the scrips where they land. Or, like us, you could try asking our Bindaas Monkeys.
We did just that three-and-a-half years ago with� two Monkey portfolios� – two randomly picked shares from two different indices. At the end of a year,� neither did well . But, surprise, surprise, over a three-year-plus horizon, �one of them beat both the BSE Sensex and the NSE Nifty �around mid-November this year. Another monkey, though, lost his shirt.
Encouraged by the success of Monkey 1, in the coming year we plan to unleash not one or two, but three monkeys with randomly-picked portfolios.
Just to ensure that you just don’t have to live with monkey tricks, we have also created two additional portfolios – one comprising the top stocks held by mutual funds , who, we can agree, are experts.
We have also created another portfolio with just the biggest shares in each of the BSE’s major sectoral indices. These are index drivers, and if any sector is doing well, this portfolio will reflect it. Or vice-versa.
So, without much ado, let us introduce our Champion Monkeys (we hope). Each one was given Rs 10 lakh to invest equally in 10 shares chosen randomly from various indices. They preferred bananas and peanuts, but we insisted they pick shares and not just eatables. This is what they picked.
Monkey 1, also known as Big Dada, has picked 10 shares from the BSE 100 index. His 10 random picks are: Axis Bank, Cipla, Federal Bank, Hero Motocorp, Infosys, M&M, Powergrid, Siemens, Tech Mahindra and Zee Entertainment (see the portfolio and the money allocated below).
When�Firstpost Business�interviewed Big Dada to explain his picks, he was resting under a tree. His simple logic, when woken up, was: “I like a good night’s sleep. You can’t go wrong with big, profitable companies like these.”
We’ll see by December 2015.
Monkey 2, also known as Satta Bhai, chose 10 scrips from the BSE Mid-cap index which comprises 264 scrips. His choices were: Bajaj Holdings, Coromandel International, Finolex Cables, HCC, Jet Airways, Max India, Petronet LNG, Risa International, Sundaram Clayton and United Bank (see the portfolio and the money allocated below).
Why United Bank, we asked him. “Dekho yaar”, said Satta Bhai, who was swinging like a trapeze artist from tree to tree and appeared willing to court risk, “we all know United Bank is in trouble, but will government let it go under? We are sure at some point its fortunes will turn. I hope to collect big when that happens. Nothing ventured, nothing gained.”
Monkey 3, nicknamed Comrade Long-Shot for his propensity to back many losers in the hope of landing one big gusher, chose his 10 shares from the BSE Small-Cap index which contains 449 shares. His picks: Balmer Lawrie Investments, Elgi Equipments, Granules India, Inox Leisure, La Opala Glass, NDTV, Rain Commodities, Siticable, Tex Infra, and Zuari (see the portfolio and the money allocated below).
When we looked doubtful about his choices, Comrade Long-Shot was dismissive. “The big stocks are over-priced. In any case, you can’t beat the market. I look at the market as one big lottery. I only have to get a 10-bagger in one share to make big money. Will Infosys rise 10-fold or some of my smaller stocks? You decide.”
We got the point. Rumour has it that Long-Shot was born near a shed used by lottery vendors. Gambling is thus in his blood.
Our three monkeys, despite their varied attitudes to risk, have to compete against the Expert Pick Portfolio as well as the Sector Champs portfolio, not to speak of the main indices themselves.
The Expert Pick Portfolio, comprising the biggest holdings of mutual funds, comprises some very big names: BPCL, HDFC Bank, ICICI Bank, Infosys, ITC, L&T,� Maruti Suzuki , Reliance Industries, SBI, and TCS (see the portfolio and the money allocated below).
The Sector Champs portfolio – which comprises the top stocks in 10 major BSE indices – comprises these companies: Tata Motors, SBI, Titan, L&T, ITC, Sun Pharma, TCS, Coal India, ONGC and DLF (see the portfolio and the money allocated below).
From tomorrow, 1 January, they’re on their own. We will periodically update you on how they are performing – our three monkeys and the two other portfolios.
Of course, we will be rooting for the monkey.
(Data from Kishor Kadam, who pleads not guilty to the charge of encouraging monkeys to invest in stocks)