Some traders spend hours and hours carefully analysing and preparing their trading strategies, only to turn up a loss or break even. But, making a strong case for sheer serendipity, one trader has let his pet hamster, Mr Goxx, make trading decisions for him.
With a 20 per cent profit so far since the hamster began trading in June, this investment strategy appears to outperform the S&P500. This strategy boils down to a simple hamster wheel and two small pipes.
When Mr Goxx runs on its wheel, the spin shuffles a list of cryptocurrencies. According to Markets Insider, which spoke to an anonymous business partner of Mr Goxx’s owner, the hamster is given €20 to spend per trade. After the wheel stops spinning and a cryptocurrency is selected, the decision as to whether to buy or sell the coin is made depending on which of the two little pipes Mr Goxx runs into. One pipe is for buying, the other for selling.
The entire process is live-streamed on Twitch and, predictably, has attracted much attention on social media.
As Mr Goxx “tweeted” on September 27, “Mr. Goxx has concluded his office hours for tonight with 1 order(s) placed. Career Performance: +63.27 EUR (+19.41 %)”
The tweet ends with a useful disclaimer: “This content is for entertainment purposes only. Investments shown here are not financial advice.”
Mr Goxx’s financial adventures can be tracked on Twitch and on the Mr Goxx subreddit.
While the absurdity of the experiment may seem like it is a risky trading strategy, random chance has been shown to show promise in stock picking. As Princeton professor Burton Malkiel wrote in 1973, A blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts.”
A study by Research Affiliates that randomly selected 100 portfolios from a set of 1,000 stocks essentially tried to “replicate” the act of 100 monkeys throwing darts at the stock pages. And it found that on average, 98 of the 100 “monkey portfolios” beat the 1,000-stock capitalisation weighted stock universe each year.
As a Forbes article noted, however, the reason was that smaller company stocks and value stocks tended to outperform the market over this period.
With crypto currencies, growth can be even more volatile. The plunge in cryptocurrency values following El Salvador’s bumpy adoption of Bitcoin as legal tender was also a good entry point for new entrants to the market. As of September 27, cryptocurrency markets were showing a recovery from a drop that came after China announced it was “banning” cryptocurrencies.
