Economics on the small scale

Wednesday, April 05, 2006

Stock Picking Strategies, Part II


From Barry's post on stock-picking contests, I'm reminded that I once participated in one such contest when I was in JA.

I believe we ended up doing pretty well in that contest. The meetings were at night, so prior to the meeting, I'd watch NBR to find out who the day's major movers were. The advantage was that at the meeting, we used the stock quotes from that morning's paper.

While this was mildly unethical use of publicly-available information, if you were to do stock-picking for real money, you should take into account that no matter how much homework you do, there are going to be risks. One of those risks is that other people have access to information you either don't have or have overlooked, and their information trumps yours. Alternately, you could have the same information, but your understanding of that information may be flawed.

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