Our 2024 stock picks

Episode Summary

Executive Summary: The episode centers on the FT’s annual stock-picking competition, using it as a comic case study in why stock selection is hard, volatile, and often luck-driven. Kadim Shiba’s crypto-heavy bets win him top FT honors, while Katie Martin’s seemingly sensible portfolio ranks near the bottom. The hosts also discuss the limits of strategic ambiguity in markets and close with playful long/short recommendations.

Main Topics: FT stock-picking competition results (Priority: 5/5): The hosts review the FT Money stock-picking contest, explaining the rules and highlighting 2024 outcomes, including Kadim Shiba’s repeated success and Katie Martin’s poor ranking. Kadim Shiba’s crypto strategy (Priority: 5/5): Kadim wins by leaning into high-volatility crypto-related names such as MicroStrategy, Coinbase, Marathon, Riot, and NVIDIA, arguing that the game rewards bold, funny, high-conviction bets rather than cautious ones. Katie Martin’s failed portfolio (Priority: 5/5): Katie recounts how a portfolio that initially looked sensible—ASML, Persimmon, Tesla short, MicroStrategy short, Dollar Tree—was derailed by market moves, macro events, and mistimed short bets. What makes stock picking difficult (Priority: 4/5): The hosts argue that even seemingly good ideas can fail because individual stocks are exposed to cycles, macro shocks, and investor sentiment; successful stock-picking requires substantial research and still may not work. Humor vs. seriousness in markets (Priority: 4/5): The discussion frames the competition as a game where the goal is to be right or wrong in an interesting way, not to provide real investment advice. Long/short segment and market uncertainty (Priority: 3/5): Rob shorts strategic ambiguity in politics because markets eventually demand clarity, while Kadim longs Gales Bakery Chain and Katie longs public embarrassment as a media strategy.

Key Arguments: High-volatility, high-beta stocks are often the best way to win a no-money-at-risk stock-picking contest because upside matters more than prudence. Crypto-linked equities such as MicroStrategy and Coinbase can dominate rankings when crypto rallies, making them attractive in a contest format. Even companies that look defensive, like ASML, remain cyclical and can be hit by broader industry downturns. Shorting stocks is especially dangerous because losses are theoretically unlimited, whereas long positions are capped at 100% loss. Stock picking in real markets requires extensive research; casual guesses are unlikely to be sustainable or responsible. Strategic ambiguity may work in politics, but markets quickly lose patience and want clear policy direction. The competition rewards being wrong in a memorable way more than being correct in a dull way.

Data Points: FT competition entrants: 1,364 - Total number of participants in this year’s stock-picking competition. Kadim’s rank overall: 12th - Kadim finished 12th out of 1,364 entrants. Kadim’s FT-internal rank: 1st among FT journalists - He was first among FT journalists for the second year in a row. Kadim’s previous FT-internal streak: 2 years running - He won the FT journalist category for two consecutive years. MicroStrategy annual return: up 400% - Rob cites MicroStrategy’s rise over the year as a major driver of Kadim’s success. MicroStrategy peak annual return: up 600% - At one point during the year, MicroStrategy shares were up 600%. Katie’s competition rank: 1,360th - Katie says she finished near the bottom of the overall standings. ASML gain at one point: up 58% - Katie says ASML was performing well until July before later setbacks. Persimmon gain at one point: up 25% - Katie notes that her long position in Persimmon was initially performing strongly before the UK budget hurt housebuilders. Tesla decline at one point: down 40% - Katie says her short Tesla position looked good early in the year before reversing. Dollar Tree ranking: one of the worst S&P 500 stocks - Rob describes Dollar Tree as one of the year’s worst performers.

Pivotal Quotes: "you seriously do not want to listen to my stockpicking ideas." — Katie Martin: Opening joke framing the episode around poor investment judgment. "you've got to go for the volatility, the big hits." — Kadim Shiba: Kadim explains his contest strategy of leaning into extreme, high-upside bets. "it is so much work" — Robert Armstrong: Rob emphasizes that serious stock picking requires deep research and cannot be done casually.

Implications: For listeners and investors, the episode reinforces that stock picking is difficult, cyclical, and often driven by macro luck. In markets, boldness can outperform caution in contests, but real-world investing still demands deep research and risk discipline.