I follow quite a few blogs, it’s a great way to get ideas for investments without doing much work. I don’t usually follow bloggers into investments, it’s rare for me to be convinced of a thesis and all too often I find myself unable to get over some fundamental issue I have with the investment. But in the last couple of weeks I’ve seen an unusual number of ideas that I really liked. Firstly I thought I’d share my favorites with you:
Texhong textile – A cheap play on fabrics in China from Red Corner.
Codan Ltd – down 77% and a great find from Shadowstock
Alloy Steel – another cheap stock from Saj Karsan
Boom Logistics – a safe play in the depressed mining sector from Alpha Vulture
I then started thinking, I follow a lot of blogs where the authors have impressive track records and I trust their judgement even if I don’t invest in everything they do. I wondered how I would perform if I skipped due diligence and just made investments in their recommended stocks, spread out over a few blogs to minimize the risk. So I thought I’d do a blog experiment.
The blog experiment
So here’s how it will work, I will set up a virtual portfolio which will follow the recommendations of a few bloggers over the last couple of years. Then I’ll see how it performed compared to benchmarks. Here are the basic rules of the experiment I have come up with.
- Starting in January 2012 with $100,000 cash
- Each position size will be 5 or 10%, depending on cash balance and authors position size
- Buy price will be the asking price 1 day after the post was public
- Only enter position if the author personally has a position
- Exit if any author does
- If there is no cash in the portfolio and new position is needed then the position with the highest gains will be sold to accommodate it
- Long shares only, no options, shorts or bonds
- No over the counter stocks
- Currency conversion charges assumed to be 1%, dealing fees $15
Here are the blogs I have chosen. These aren’t the only ones I follow but I have chosen them because I like the stocks they pick, they usually indicate personal portfolio changes, they’ve been around long enough since 2012 and trading frequency suits the experiment. Most importantly it’s easy to navigate their websites archives.
I was hoping to start the experiment earlier than 2012, but most blogs haven’t been around long enough. The few that have are either very hard to navigate to old posts, or the old posts have been lost entirely due to website changes. Let me know of any blogs you think should be added, and check back next week for the results of the experiment!