HOW TO MAKE EASY MONEY IN THE STOCK MARKET

What's up? Grandma's guys here! So, after a year patiently waiting and getting hundreds of comments, DMs, emails, letters, and smoke signals asking me how my stock market investments are doing, the time has finally come to reveal exactly how much money I made.

And I gotta admit, it's a lot more than what I expected. Like, if you thought the entire market being up 28% was nice, think again! Because my strategy is up over 41% with absolutely no work whatsoever. We're going to repeat the exact same process again in 2022 to see just how far we could take it.

The secret, you might ask? Well, I had a monkey pick stocks at random, and believe it or not, it's fundamentally proven to work 96% of the time. So, we need to talk about exactly what's going on — how a monkey was able to pick the best-performing stocks, precisely what I invested in, the strategy behind this, and then finally how you could use this information to try to make as much money as possible.

But before we go into this monkey business and why Boo has become a champion of stocks, it would help me out tremendously if you go ape on that like button by making it turn blue! Or if you haven't already subscribed, doing that makes me go bananas. All right, monkey jokes aside, thank you guys so much! And also, a big thank you to Public for sponsoring this video, but more on that later.

So, all of this started in December of 2020 when I came across a quote from The Economist, Burton Malkiel, who said that a blindfolded monkey throwing darts at a newspaper's financial pages could select the portfolio that would do just as well as one carefully selected by experts. And that got me thinking I should give it a shot.

Well, within a few hours, I was put in touch with the fun-loving celebrity monkey, Boo, whose owner volunteered to help me on my quest to make as much money as possible. So, here's how we were able to make that happen. I found a website that lists the top 1,000 publicly traded companies in the US, and then I used a random number generator to pick a number one through a thousand that would correspond with the ranking of each of those stocks on the list.

I repeated that process 30 times so I could randomly select a large enough sample size for Boo to pick from. And then, with each of those 30 stocks written down on a piece of paper, Boo proceeded to hand-select 10 of them where I could invest ten thousand dollars each.

And now, to my surprise, one year later, those 10 randomly picked stocks picked by a monkey are doing better than the overall index, up over 40% versus the S&P's measly 28%. And if you're curious which stocks I bought, how well they each did, and which ones he's gonna pick in 2022, here you go.

The first is Ford. They're one of the largest auto manufacturers in the world. They were the number one best-selling automaker in the US throughout 2021. And their new Mustang Monkey is the number two best-selling electric SUV. You might even see them as a taxi in New York.

Second, Cerner Corporation. They provide health information technology devices and hardware with more than 28,000 employees around the world. Third, Align. They manufacture 3D digital scanners and the Invisalign braces used by dentists. Fourth, NLM Americas is a conglomerate of energy companies located in South America. However, tax reforms and shutdowns have led the company to fall over 30%.

Fifth, Republic Services. They're one of the largest waste management companies in the US, serving as undeniable proof that one man's trash could be another's treasure. Sixth, we got the most hated company of Millennials, BlackRock. They're an investment corporation with now almost 10 trillion dollars under management and a history of solid growth.

Seventh, we've got IHS Markets, which provides data and trade processing for foreign exchange and loans. Eighth, Invitation Homes is the largest owner of single-family rental properties in the U.S., owning approximately 80,000 homes. Because they didn't buy avocados and overpriced coffee.

Ninth, Tesla. They manufacture the most popular and data-driven electric vehicles in existence. They were added to the S&P 500 exactly a year ago, and since then they've reached a one trillion dollar market cap despite Elon selling.

And tenth, Netflix. One of the top streaming platforms in existence with over 207 million paid subscribers worldwide. Even if Mr. Beast gets more views on YouTube in 24 hours than the original Squid Games got in a week. That gives me a total return of 41% in one year since December 21st, 2020, which is higher than the 28% gain of the S&P 500.

And what's really weird about this is that these returns are somewhat normal for a monkey. Let me explain.

Now, before I go into that, I know what you're probably thinking: But Graham, how do you know this isn't just random luck? Maybe the monkey just happened to pick really good stocks. You have to do this again in 2022. And don't worry, as you're about to see, Monkey Boo is picking another 10 stocks for 2022.

And yeah, maybe some of it could be luck, but when Burton Malkiel originally made a statement that a blindfolded monkey could do just as well as some of the most well-respected hedge fund managers out there, his words were closely studied.

In 1988, The Wall Street Journal simulated this experiment by pretending to be a monkey throwing darts at a random list of stocks and then comparing that with a professional over a six-month period to see who ends up making more money. The experiment was repeated over a hundred times throughout 14 years, and surprisingly, 40% of the time, the monkeys came out ahead — more profitable than the experts did.

And to make matters even worse for the experts, they just barely managed to outperform the Dow Jones Industrial Average despite having every piece of stock-picking analysis and research available to them. Another group of researchers also repeated this exact same experiment from 1964 through 2010. They found that their monkey portfolio consistently beat the stock market by an average of 1.7% per year, 96% of the time.

And it doesn't even stop there! A goldfish's stock picks were simulated over a thousand times and beat the market by an average of 14.5% over three years. There's also a cat that beat the market by 8%, a monkey named Adam who beat Jim Cramer, a chimpanzee who beat 94% of Russian bankers, and even a crypto-trading hamster who beat Warren Buffett!

Believe it or not, there's actually a formulated reason why animals are able to get such a high return, and it has nothing to do with luck, chance, or a secret world of headless chickens as depicted in South Park. Instead, it has to do with the strategy being used to pick stocks that tend to do well consistently over and over again.

And here's what they discovered: Research conducted in 2013 found that by randomly selecting 30 stocks out of the top 1,000 companies and buying them all in equal proportions, you're increasing the chances that such a portfolio would contain smaller stocks, which have the potential for even higher growth.

And because monkeys didn't get emotional and panic sell the moment Jim Cramer comes out with a spooky headline, that led to an outperformance of the entire market year after year. As proof of this, between 1980 and 2015, smaller stocks returned 11.24% annual growth on average, while large stocks returned 8%.

So that just means when 30 stocks are picked at random while investing an equal amount in each, you're more likely to include smaller stocks, which would boost the portfolio's return when compared to an overall index. And oops, voila, you beat the market!

Now, even though this sounds like the ideal way to invest, before I have Boo pick another 10 stocks for 2022, you're probably wondering, "Well, Graham, if it's really that easy, then why isn't everybody doing it?" I hate to be the bearer of bad news, but there's an answer to that too.

In terms of why everyone is not using animals for their investments, the reason is simple, and that would be risk. Even though smaller companies outperform the markets by 1.7%, 96% of the time, they also experience significantly more volatility. Meaning just as much as they went up, they also went down.

For example, if we compare the top 1,000 growth companies with the top 2,000 value companies, we could see that nearly every price movement in the value category is magnified by at least 20% to 50%. So every peak is higher and every drop is lower.

And risk is something that every single investor needs to consider when they think to themselves how much money do they want to make or potentially lose. After all, if you didn't care about risk and you just wanted the small chance to make a whole bunch of money, you would just go out and buy a whole bunch of lottery tickets. But people don't do that because there's too much risk that you would lose everything.

The reality is with investing: you have to balance the amount of money that you make with the amount of risk you're willing to take. And for most investors, taking the short-term volatility if investing in 30 completely random stocks for an average of a 1.7% higher return doesn't generally beat the safety of investing throughout the entire index and earning a little bit less.

My monkey portfolio is a perfect example of this. Even though it's currently beating the S&P 500 by 13%, in the event the market dropped, it would be that much worse. In fact, as you can see throughout the year, the top performers weren't always on the top, and for a while, several of them saw rather severe loss while the S&P 500 gained.

That's why, as interesting as this experiment is, and as fun as it is to research and watch, when you account for both stability and risk, the best investment still tends to be throwing it all in an index fund tracking the overall market and then doing absolutely nothing.

Even though technically 96% of the time, you're going to see a slightly lower return, you wind up paying that extra little bit for the assurance that your returns will be more stable, the drops will be smaller, and you'll see consistent growth over decades and not just years.

But that's not going to stop me from investing another hundred thousand dollars to recreate this experiment again in 2022. And you know what that means! We're going to be going back to our Monkey Boo to see if he could beat the market again for two years in a row.

To start, just like the first time, I'll use my random number generator to find out which ranking that correlates within the top 1,000 companies, gather 30 different options, and then I could give all of those to Boo for him to pick at random.

So without further ado, feel free to scroll back and slow down exactly the stocks that were picked. And now here's Boo! In one year, we could see who came out the winner: hedge funds, the S&P 500, or the genius stock-picking Monkey Boo. Because come on, you can't say no to that face!

Can I ask Stephanie once to pick out ten winners again like you did last year, Boo? He's looking around. There's one! Indeed! Oh! Blue's already picked. Number two! SJM, JM Smucker Company. Eight more, sir! Always got one. Tyler Technologies.

He's being very selective this year. The Masco Corporation. Photonics Corporation. First American Financial Corp. Costco Wholesale Corporation. Lamb Weston Holdings, Inc. Aptar Group, Inc. There it is! Williams Sonoma, Inc.

Now, for reference, I invested ten thousand dollars into each of these ten companies for a total of one hundred thousand dollars. And from here on out, we could track their performance to see just how well they do over the next year.

Oh, and also, don't forget to subscribe because it's totally free. And if you want to follow exactly what these stock picks do over the next year, you may as well click that button before you forget!

Now is the perfect time before you forget. Thank you guys so much! I'm also going to be linking Boo's information down below in the description for anyone who wants to follow his channel.

And don't forget to claim your free stock down below in the description when you sign up for Public! So, with that said, you guys, I really appreciate you watching. Also, feel free to add me on Instagram or on my second channel, The Graham Stephan Show. I post there every single day I'm not posting here.

So, if you want to see a brand new video from me every single day, make sure to add yourself to that. And also on my Hungry Bull app down below in the description, where you get a daily newsletter and you can track all of your favorite stocks with all the information you ever will need.

So it's all right there in the description; that's free too! Thank you guys so much for watching, and until next time!