CNBC has been conducting a $1 million Porftolio Challenge. Anyone can enter as many portfolios as they desire for free, with the grand prize being $1 million.
However, there seems to have been a problem with this challenge.
A trader could go to the CNBC Web site and select a number of stocks to buy, but hold off on executing those trades. If you made the selection before the close of regular trading at 4 p.m. EST and left your Web browser open, you could execute those trades after hours and still receive the 4 p.m. closing price. For example, if a company whose stock closed at $20 a share rose to $25 in after-hours trading, you could buy the stock at $20, even though it was already worth 25% more.
This despite rules that traders are not allowed to execute after-hours trades.
The top four portfolios seem to have made use of this loopholes. With this strategy, they have booked phenomenal returns.
Over the first nine trading days of the final round, the top five stockpickers tallied average returns of 45%.
More at Businessweek.
Personnally, I lean toward efficient-market, making this kind of competition (sans-cheating) uninteresting. I understand the incentive to cheat and I applaud those winning this silly game. At least their acts signal creativity and cunning.
Recently, I was saddened by a similar competition created by one real smart person:
http://www.fool.com/investing/value/2007/03/02/be-the-next-warren-buffett.aspx
Previous post removed for redundant redundancy.
And efficient markets win again!
http://www.reason.com/blog/show/120926.html
What would BRK-A shares do if she was announced as the heiress to the throne?
The comments at the bottom of that are wonderful, and dead-on. Free portfolios, no actual money required, and limited timeframe make this competition a marketing ploy at best.
Thanks for the link Erich.