Cat Beats Professional Wealth Managers at Picking Stocks

The stocks selected by Orlando the cat managed to outperform those selected by finance professionals.

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Everyone knows that cats are good at cuddling, catching mice and starring in viral videos. But it turns out they are pretty good at making money, too.

A cat named Orlando has bested several professional money managers in The Guardian’s 2012 investment challenge, making almost  £400 (about $650) more than the professionals during the year-long challenge. The British newspaper pitted the ginger tom against a wealth manager, a stock broker, a fund manager and a team of finance students from a Hertfordshire school. Each team chose five companies from the FTSE All-Share index in which to invest £5,000 (about $8,000), with the opportunity to change stocks every three months, and then let their strategies play out over the course of the year.

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How did the teams make their stock picks? According to The Guardian, “While the professionals used their decades of investment knowledge and traditional stock-picking methods, the cat selected stocks by throwing his favourite toy mouse on a grid of numbers allocated to different companies.” Turns out the throwing a cat toy technique is fairly effective. As The Guardian notes, “All but one of Orlando’s stocks rose during the last three months of the year, including specialist plastics and foam company Filtrona, which Orlando had hastily swapped for under-performing Scottish American Investment Trust in September.” By the end of the year, the cat’s portfolio increased by an average of 4.2% and Orlando’s portfolio had grown to £5,542.60 — about $8,900 — compared with the professionals’ £5,176.60 ($8,328).

The cat’s success shows that there is a distinct element of chance when it comes to making stock market picks. Time to crack open the Fancy Feast for Orlando and perhaps trust your own instincts when it comes to investing — or, at least, read economist Burton Malkiel’s book A Random Walk Down Wall Street, which discusses the idea that markets are completely unpredictable.

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