Gamble on CNBC Million Dollar Challenge

[This post is written and copyrighted by FIRE Finance (]

Nov 10, 2008: Most of our readers may be aware that CNBC is back with their million dollar portfolio challenge. Each player is given 1 million dollar play or fictitious money as principal amount to start with. Participants are ranked based on their portfolio performance everyday. Each week the investor with the largest percentage gain is awarded $10,000, yes real money. This contest is giving away $1,000,000 in cash and amazing prizes!

Everyone who registers for the contest is eligible to receive a FREE $25 Micro Account from FXCM, CNBC's exclusive currency sponsor. Click here for details.

Trading starts November 17th, but now we can start training for the main event with CNBC's Currency Practice session.

Good or bad?
As long term investors what do we benefit from this game? Nothing. Zilch. Nil. The reasons being:
  • The game is being run for a period of 10 weeks. It is a very very very short time period for any stock to perform according to its intrinsic value.
  • It is only about stocks, purchase of mutual funds are not allowed. Of course one can trade ETFs.
  • It encourages market timing over extremely short period of time. We feel market timing is not a good strategy even for longer horizons.
  • If the market suddenly reacts to any unknown factor there is hardly any time for the portfolio to recover!
  • We really wonder if any amount of investing acumen can be proved by playing this game.
  • The game has been designed to encourage active trading which is contrary to our investing philosophy encompassing the strategy of buy and hold.
  • Thus playing this game is as good as dart boarding.
To Play or Not to Play?
So, it is indeed gambling. Purely for fun we decided to participate in the game with absolute minimal effort.

Which Stocks and Why?
Instead of choosing a stock blind-folded we actually gave it a little thought and chose Apple Inc. (AAPL). Here are some reasons supporting this choice.
  • Google Inc. (GOOG) is many people's and Wall Street's darling. However since it's launch Google has returned 323% and Apple 503% during the same time period. Surprise, is it?
  • Apple has a loyal (and in many cases headstrong) customer base.
  • It has an able leadership.
  • We never had any doubts about their engineering talent pool.
  • Amazingly for the last several years it had proved that it's marketing team is astute as well.
  • It had risen like a phoenix from its ashes. A decade ago it used to trade for less than 7 dollars and today it closed at $95.88. Astounding accomplishment!
  • Now most importantly it has a quite an impressive product line. Several products are in the pipeline which leverage already existing technologies and products.
  • The bottom line is - innovation is at its peak now at Apple; it is far from being saturated.
That is all. Our Entire portfolio is invested in only one stock - Apple. Minimal fuss, minimal waste of time and energy. Let us see what is in store in future!

By the way are any of you playing the game? How is it going for you?

Related Posts