I Spent $100,000 On A Stock Picking Monkey

What's up you guys? It's Graham here. So if you thought this year cannot get any more unpredictable, it just did because I have a hundred thousand dollars on the line for the sole purpose of testing an odd yet unique experiment to see whether or not a monkey could beat the stock market.

See, it all started about a month ago when I was doing some research, and I came across a quote from the economist Burton Malkiel, the author of "A Random Walk Down Wall Street." He said, "A blindfolded monkey throwing darts at a newspaper's financial page could select a portfolio that would do just as well as one carefully selected by experts." The motive behind such a crass remark was to emphasize that not even the most intelligent investors can consistently beat the market. So if a monkey is able to replicate the same job as some of the most educated professionals in the world, then that's something to consider.

So today, I'm going to be putting this experiment to the test for real by investing a hundred thousand dollars, my own money, into completely random stocks with the help of the YouTube celebrity Monkey Boo. Then, I will document the performance of these stocks over the next year compared to the overall market index to see just how well a monkey can pick stocks.

So here's how this is all gonna work. I found a website that lists the top 1000 publicly traded companies in the US. I'm then going to use a random number generator to pick a number one through a thousand that will correspond with the ranking of one of those stocks in the list. Now, once I get 30 randomly generated stocks, I'm going to be giving that entire list to Monkey Boo, who's going to further narrow down those choices by picking out his top 10 out of a jar. Then, I will invest 10,000 in each of those 10 stocks on the morning of December 21, 2020, for a total of 100,000.

So let's get right into it, and we'll start off by randomly picking 30 stocks out of the top 1000 companies. And here we go! I got my computer, and to be honest, I'm kind of nervous to see what's going to come up. So let's start off by clicking generate. We got 110, and that corresponds to 3M, which is 110 in the world rank. Generate a new number: 86, Union Pacific. 145, Blackrock. 315, that's Moody's Corporation. So I'll keep doing this until we hit 30 stocks, and then I could give all 30 to Boo so he could then pick 10.

And now that we have 30 stocks, I'm gonna be sending him all over to Boo to see which ones he picks and which ones I'm going to be investing a hundred thousand dollars into. We've got 30 randomly generated stocks. We're going to fold each one up; we're going to put them into the bowl; we're going to let Monkey Boo pick out 10 of them. For you guys, can you do it, Boo? Yeah, can you pick the winners? Can you pick the best ones?

All right, to make sure that Boo would pick a stock, each one has a craisin wrapped up in it, and Boo loves his craisins, so this is going to be easy. But he's going to pick out 10 fantastic stocks, ain't that right, babe? Yeah, pick them out! [Music] Got one! There we go; there is stock number one.

All right, pick number two. Out here we have CRN. There's two, is that it? Okay, let's see what we got here. ALGN. All right, all right. ENI, I guess. All right, here we got another; we got number five! Let's see what it is, Boo. RSG, winning! Stock number six, BOK. Let's see what you got here! INFO. Oh, Boo put his hand on this, and he's got ultimate confidence in that one! Let's see what we got here. INVH, all right. Boo, you're getting close; you got two more to go. Here's your craisin side. All right, pick out another one. Oh my goodness! Everybody will be excited about that one! Blue pig! Tesla! And we've got NFLX. All right, you did a really good job; you picked out 10 great stocks, right? These… oh, they're the best, best ones ever!

All right, shake my hand. Good boy! You got a kiss for me? Oh, he's a good boy!

So now let me explain a little bit more background into exactly which stocks Boo has picked. The first, Ford; they're one of the largest auto manufacturers in the world. They sell two and a half million vehicles per year, and recently they announced a redesign of the popular Bronco and Mustang designs met with some mixed reactions.

The second, Cerner Corporation; they provide health information technology devices and hardware with more than 28,000 employees around the world. The third, Align; they manufacture 3D digital scanners and the Invisalign braces used by dentists. They've also doubled in price in 2020. Fourth, L Americas is a conglomerate of energy companies located in South America. They also pay a whopping six percent dividend, but the stock price has not had a great run throughout its history.

Fifth, Republic Services; one of the largest waste management companies in the United States, they've also begun investing in solar products and natural gas. Six, we got the big behemoth, Blackrock; they're an investment corporation with almost eight trillion dollars under management and a history of really solid growth. Seventh, we've got IHS Market, which provides data and trade processing for foreign exchange and loans. They've also recently entered into a merger agreement with S&P Global, valuing the company at 44 billion.

Eighth, Invitation Homes is the largest owner of single-family rental properties in the United States, owning approximately 80,000 homes. This year has not exactly been easy for them, but they're working to restructure some debt to maintain cash flow. Ninth, Tesla; they need no introduction. The stock is up 700% in the last 12 months, and it's one of the most unpredictable from this entire list. In 10th, Netflix; one of the prime streaming platforms in existence with almost 200 million paid subscribers worldwide. However, they're now facing competition against other streaming services like Disney Plus, which could put a dent in their profit.

Now, in terms of how I think each of these is going to do, let's go to the tier list. First, let's start with Netflix; they're a great company! They're reinvesting a lot of their money back into creating their own original content, but they have a lot of competition coming up this year. So, for that reason, I'm gonna have to put them in the B tier.

Next, let's talk about Ford; they're going in the electric vehicle space, which I think is the right move for them. They have a really loyal following for the F-150, and for that reason, I have to put them in the C category. I still think they have a ways to go, and they haven't quite proven themselves yet with their new concepts, but there's potential.

Then, let's go to the big daddy, Blackrock; they have a lot of money under management, they have seen some very solid growth long-term, and because of that, I'm gonna put them in the B tier. Next, we have Cerner; now this one had a big run up since 2012, but over the last five years, it really hasn't done much. And because of that, I'm just not too optimistic on it over the next year, so I'm going to put this in the D tier.

Next, we have Invitation Homes; now this is a really tricky one because this year has been kind of mixed. Real estate on the ownership side of things has gone through the roof, but as a landlord, there's a lot higher of a risk that their tenants might stop paying rent. So, because of that, and because I don't think they're going to see a ton of growth over the next year, I'm going to probably put them in the E tier.

Next, we have L Americas, and remember this is an energy company, which I feel like is probably not going to be the best as solar takes over. So, I'm just going to automatically put this in the Yikes; I don't want to put it in the F, but I'm going to put it in the F just so we have something there. After that, we have Align Technologies, and I believe 3D printing is going to be big! Invisalign is not going to go anywhere, so I'm going to put this in the B tier.

Next we have IHS; I'm confident about the growth, and I would put this in the B tier. After that, we have Republic Waste Management, and again, I feel like this is going to be a solid company. I don't see too much risk here with waste management; we're all going to have stuff we're throwing out, but I believe maybe their potential for growth might not be as strong as, let's say, Netflix or Blackrock. So for that reason, I'm going to put this in the C tier.

And finally, we got the very controversial one, Tesla. This is either something that people love or they can't stand it and they want it to go down in price. But for me, I'm gonna be pretty optimistic about this, and I'm just gonna put this in the—let's put this in the S tier. This is by far, I would say, the riskiest stock from all of them, but I think they have so much potential that this could be a mega blowout winner, maybe, or it could be the biggest loser. It's going to be one or the other.

And I realized, you know what? I don't have anything in the A tier, so I'm just going to go ahead—if I'm going to put anything in there, I put Netflix in there. I believe there's a lot of potential for Netflix; they could easily raise prices and no one would really cancel. So, this is my final list, and that is my prediction for how these are gonna do.

So now, the moment you've all been waiting for, I'm gonna be buying these 10 stocks for a total of one hundred thousand dollars. Now, in order to do this, I'm going to be using the free investment platform M1 Finance, because they have this really cool feature called the investment pie. I kid you not, they actually call it an investment pie because look at it, it looks like a pie!

Now, the reason I wanted to go with M1 Finance for this is because they allow me to buy fractional shares. That means I can invest an exact dollar amount into these stocks down to the penny, regardless of what the stock price is. Second, they allow me to create my own investment pie that I could distribute my money into completely equally. And when I invest a hundred thousand dollars into the portfolio, M1 Finance does all of the work and balances out the entire amount for me, so I don’t actually have to sit there buying each stock one by one.

And third, M1 Finance allows for dividend reinvesting, so as some of these stocks pay out dividends, they could automatically reinvest back into the portfolio and help it grow even faster. And of course, if anyone's interested in learning more or signing up, you can feel free to use my link down below in the description. It helps me out, and overall, M1 Finance is a really good platform that I would highly recommend.

Several days later—so now it's the morning of December 21, 2020, and it's time to invest 100,000 into these stocks. So now, let's go to the M1 Finance account, and as you can see right here, we got the 10 stocks, each in 10 proportions on the right. So now we'll go and click buy and sell, we'll type in 100,000, click continue, and then we click confirm buy, and order submitted! And it’s gone!

Now, for reference, as of right now, the S&P 500 is trading at 36.96. So, in one year's time, we'll see who does better: the S&P 500 or the monkey portfolio. Now, before you think I've lost my mind for doing this—yes, I have lost my mind! But for anyone who thinks I'm just wasting money here, chances are this portfolio might actually do fairly well.

The Wall Street Journal simulated this exact experiment from 1988 to 2001, and they found that 40% of the time, the monkeys actually performed better than professional money managers. And in a second study, which used a stock-picking strategy similar to the one I'm using today, their simulated monkeys consistently beat the market by 1.796% of the time.

The only difference between them and me is that they used a simulated monkey, whereas I actually used a real monkey and put my own money on the line. And of course, I intend to keep everyone updated on how this portfolio does relative to the overall stock market.

So if you want to see whether or not a monkey could actually beat the stock market, make sure to smash the subscribe button, hit the notification bell, and as usual, smash the like button for the YouTube algorithm so you don't miss out on any of the future updates. With that said, you guys, thank you so much for watching, and remember, feel free to add me on Instagram. I post pretty much daily, so if you want to be a part of it, there feel free to add me there.

As on my second channel, The Graham Stephan Show, I'm posting 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 lastly, if you guys want four free stocks, use the link down below in the description, and WeBull is going to be giving you four free stocks when you deposit 100 on the platform, with those stocks potentially worth all the way up to 1,600! And at that point, it’s pretty much like free money. So if you guys want free money, use the link down below. Let me know which free stocks you get. Thank you so much for watching, and until next time!