More than 1,000 Blade readers have submitted portfolios in The Blade's Stock Market Game for 2004. They are a mixture of high-technology companies, big-name firms, stocks that outperformed the popular averages last year, and some companies that have attracted gotten a lot of attention recently.
Some entrants took a chance on relatively obscure stocks. In all, they picked more than 1,300 companies.
The winner of the year-long contest will be the one whose hypothetical portfolio gains the most by year's end. Entrants each picked four stocks by Dec. 31 that were trading at $5 or more per share. Two had to be on the New York Stock Exchange and two on the Nasdaq Stock Market. Each entrant had to split a hypothetical $40,000 evenly among the four stocks.
The top finisher in the contest will receive airline tickets for two anywhere in the continental United States, provided by Atlas World Travel, a contest co-sponsor. The second place finisher will receive $300 in cash, and third place will receive $100.
“We see a lot of growth and technology [stocks],” said David Himich, a financial consultant with the brokerage firm Smith Barney, whose Toledo office is tabulating contest entries and results. Smith Barney is a co-sponsor of the contest.
David Sattler, one of the Smith Barney brokers monitoring the contest, noted that several of the entrants' top 20 picks had very large price run-ups last year and may not perform as well in 2004. Others could benefit from a rebound from their lows of the last couple of years, he said.
Several of the top picks pay dividends, which for investing is considered a plus but not for the contest, which doesn't count dividends.
Many of the most popular picks are well-known names that get a lot of attention in the press and on TV networks like CNBC, and some are perennial investor favorites. Eleven of the top 20 choices were among the top 20 picks when The Blade last did the contest, two years ago. Fourteen are among the 40 most active stocks on all exchanges last year.
Many readers apparently are counting on lightning striking twice: The 10 most popular NYSE stocks gained an average of 90 percent in 2003, and the 10 most popular Nasdaq issues soared an average of 217 percent last year. Among the big gainers were, on NYSE, Corning Inc., up 215 percent last year, and Avaya Inc., up 428 percent, and, on Nasdaq, Nanogen Inc., up 481 percent, and XM Satellite Radio, up 877 percent.
“If this isn't chasing last year's returns, I don't know what is,” said LaMont Stewart, another Smith Barney broker who is monitoring contest results.
Giving the contestants a counterpart are four “challenge” portfolios. None is eligible to win.
They are a dartboard portfolio, chosen at random by members of The Blade's business news staff and three portfolios put together by professionals. The three are Sarah Berndt, a vice president in the Toledo office of Fifth Third Bank's Investment Advisors division; Mark Evans, director of Investments for Trust Co. of Toledo in Springfield Township; and Ted Sipes, of Bowling Green, president of the Northwest Buckeye chapter of the National Association of Investors Corp., which includes investment clubs in this region.
Mr. Sipes, a retired Findlay teacher who is a full-time employee of the Home Depot store in Bowling Green, chose his employer because he works there and the firm is “having a solid year.” His other NYSE pick is Sprint PCS Group, a telecommunications firm that, he said, is reducing its debt and should be profitable this year. On Nasdaq, he selected Atmel Corp., a designer and maker of computer memory and logic circuits, and Illumina Inc., which makes devices for genetic analysis. “I feel this will be an exciting stock to own and watch,” he said of Illumina.
Ms. Berndt cautioned that “a well-diversified portfolio should have 45 or so stocks,” but she took a stab at four: on NYSE, EMC Corp., a maker of networked storage systems and software, and L-3 Communications Holdings Inc., “a pure play in the defense electronics industry”; and on Nasdaq, Cisco Systems, a manufacturer of networking and communications products, and Amgen Inc., a biotech firm.
Cisco will benefit from increased spending on technology, she said, and Amgen has some interesting drugs in the pipeline.
Mr. Evans is no stranger to the Stock Market Game. He helped his sister, Kris, pick her stocks for The Blade's contest in 1996, and she led four of the six months of that contest, ending in second place. This time, he likes, on NYSE, Everest Reinsurance Group Ltd. and Burlington Resources Inc., an oil and natural-gas firm, and, on Nasdaq, Dentsply International Inc., a maker of dental-lab products and dental equipment, and Martek Biosciences Corp., a producer of nutritional oils from plants and algae.
Of Martek, he said, “This one is not for the faint of heart ... It's a pure growth story.”
The Blade's dartboard picks are, on NYSE, Masisa SA, a South American producer of particle board and fiberboard, and Questar, a natural-gas company, and, on Nasdaq, Independent Bancorp, a Michigan bank holding company, and Cass Information Systems Inc., a provider of payment and information-processing services.
In the past, readers' favorite stock picks have done very well in some years and performed miserably in others. In 1999, for example, the top 20 reader selections gained a very respectable 63 percent, but the winning portfolio that year gained an astounding 815 percent.
However, in 2002 - the worst year on Wall Street in decades - the top 20 picks sank 41 percent, and only 64 of about 1,300 portfolios ended the year in the black. The winning portfolio that year was up 124 percent, thanks largely to gold stocks that did well in a very nervous year.
The favorite reader selections match up pretty well with some other popular lists. Twelve of them, for example, are on the latest Money magazine “100 companies to watch” list.
However, the 20 top picks are not on the radar screen of some professional strategists. Not a single one appears on Standard & Poor's 40 PowerPicks 2004 list, and only one, Microsoft, is on Merrill Lynch's current Focus 1 list of 33 highly recommended stocks.
As for the performance of the Dow Jones industrial average, most entrants expect it to climb about 10 percent by year's end, or about on par with professional prognostications. The guesses for the Dow's level at the end of the year, requested on the contest entry form to be used in case of a tie, range from under 8,000 to over 13,000 but were mostly clustered between 11,000 and 11,700. The Dow closed 2003 at 10,453.92.