Summary

• CNBC’s Million Dollar Portfolio Challenge. The game and why it is relevant.
• A 468% gain is worth having. A look at the performance and what it tells us.
• Getting the message. Indications for the future and possible causes of a severe pullback in the broader Markets.

• What are the current risks? A look at what may cause the markets to loose 15 — 25% next year.

What differentiates your investment strategy from the broader market? How do you know where the market is heading? There are some who just trade off every news item. There are others who trade in opposition to current sentiment. I love watch lists, I have about 30 of them that I monitor frequently. Some are baskets of ETFs and Reverse ETFs, others include ADRs, tech, commodities etc. I use the performance of these watch lists to help identify areas of opportunity and risk. Creating my own metrics by which I can judge market performance and try to get a sense of what is coming next. The one I want to share with you today was created for a game, but that makes it no less valuable. It was created near the market lows, during the financial crisis.

CNBC’s Million Dollar Portfolio Challenge is a fantasy stock and currency competition that allows investors of all levels to play with virtual money for a chance to win one million dollars. From CNBC.

I imagine that many of you are familiar with the game and probably played at some point. I participated, but did not like the idea of people having many multiple portfolios. It seemed to me a little like cheating or just random luck if people were allowed to create 30 portfolios and choose the best variation. I thought the whole point was $1 million each. A level playing field, an arena for the contestants. A chance to display their investing prowess.

The last time I played was fall 2008. On October 29 th 2008 I put together my portfolio allocating, $861,841 to stocks and $138,159 left as cash. It was made up of everything I thought could do well. I will remind you that well was not a common theme at that time as we were in the middle of the financial crisis. I created my own watch list in order calculate individual stock allocations prior to entering them into the game. The watch list has remained unaltered ever since. I now use it as a barometer for how I think things are going generally. I should also note that this strategy was completely useless in the game and was abandoned the first week.

A 468% return is worth having .

I hope you all enjoyed Thanksgiving. It is a great day for doing many things including research. As I get ready to round up 2014 and start looking at what 2015 may hold; my aforementioned watch list is one of the places I go. For the first time in over six years I decided to clean it up a bit. It no longer reflected what had really happened. For example there were seven defunct ticker symbols, one stock showing too many gains because of a reverse split and another two that had split in the other direction. So here are the results of the clean up.