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Wednesday, December 2, 1998

Dueling Wise

by Mark Stolz ([email protected])

Last week, I was flipping through one of my last remnants of the Wise world, my monthly copy of Smart Money. I enjoy going through this magazine, not for their investment advice, but because I can usually find some good stock ideas to go off and research myself, especially in the foreign markets.

The magazine runs a monthly feature of dueling portfolio managers (my apologies to Dueling Fools), which pits one portfolio manager against another for a year, with each manager starting with a mock $50K stake. This year's duel is small-cap vs. large-cap. Until recently, the small-cap guy had been trouncing the large-cap guy, but small-cap underperformance has caught up with him.

Now, I'm not going to mention either one of these manager's names, as I'm sure they are both very astute and decent guys. However, both are trailing the S&P 500 this year. Again. Pitifully. I shudder to think how much dough these two suits make in a year's time, but I'll bet it's pretty considerable.

I know the point of this series of Smart Money articles is to highlight the small stock vs. large stock debate, but c'mon, both trailing? They've bought and sold, and bought and sold, and bought and sold, and... well, you get the message. For all their jockeying, they still underperform the benchmark we all try to measure up against. If this doesn't highlight the message that the Motley Fool forum is trying to get across, then nothing will. And to think that less than two years ago, I was right there with them.

But since then, thanks to a few pieces of good reading (Motley Fool Investment Guide, Unemotional Investor, etc.) and a sprinkling of solid research, I've changed the way that I do my buying and selling. I've pretty much eliminated the selling part. And how would I stack up against the suits? Well, even after today's sour market, I'm looking at a gain north of 45% for my portfolio this year, while one of these guys is struggling to get above 15%, and the other is struggling to break even.

Do I want their jobs? Not on your life. Could I do a better job of picking stocks? I think I know the answer to that. And I'm willing to put my own money on the line, every day. Ain't it great to be a Fool?

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