Robinhood gets robbed in Heard’s annual stock-picking contest

The contest, in which Heard on the Street columnists and general Wall Street Journal readers conduct virtual polls to see who fares best on paper — between the beginning of August and the end of December, is a special feature this year. against a suitable background. Real-life stock picking caught fire in early 2021 as many small-time investors took tips from online forums like Reddit. They then turned to retail-oriented brokerage platforms such as the promisingly named Robinhood Markets to place fee-free trades.

While retail punting is nothing new to the stock market, it happened this year in such large amounts that some popular “meme” stocks like GameStop and AMC were pushed to stratospheric valuations that the pros scoffed at. But meme stock enthusiasts saw themselves as a creation. The movement is not unlike that of Sherwood Forest’s legendary thief – robbing wealthy Wall Street tycoons on behalf of ordinary, amateur investors. Short sellers, who made money by betting against stocks, came to occupy a prominent position in the movement’s cult of villains.

Heard on the Street columnists have been largely skeptical of the market’s Reddit revolution, and it’s shown in many of our picks. One columnist even opted for a “sell” on GameStop itself. It achieved a somewhat modest but still positive 4.8% return. The top three columnists sold all recommendations on pandemic-era winners, including Pinterest and British food delivery company Deliveroo, which delivered returns of 36 per cent and 41 per cent, respectively.

Tellis Demos’ sales rating on Robinhood was the best single columnist’s, which went public on July 29. Equity trading volume was falling since the large, Reddit-powered first quarter, Mr. Demos wrote, leaving Robinhood primarily dependent on cryptocurrency trading. As for growth: Robinhood’s revenue per user in the second quarter alone accounted for nearly a quarter of the gag currency Dogecoin. Should that falter, Robinhood shares look pricey, he warned.

he was right. Robinhood shares fell 61% after Mr Demos made his choice until the end of the contest on 17 December. Several of our readers had the same idea: 109 of them chose Robinhood as a sale. But more than that, 263 chose it as a buy and did not perform so well.

Still, the Reddit crowd was not without some scale in the competition. The fourth best reader overall, with a 172% return, was Avis Budget Group. True, car shortages have driven up rental car prices and profitability this year, but Avis has become a de facto meme stock, as day-traders at one point raised it from $37.30 at the end of last year to a single one. had made over $300 per share at the point. October. Out of some 15,000 readers, the best, achieving a 192% return, was for Ehr Test Systems, which makes test equipment for the semiconductor industry.

Still, at least from one perspective, the relative pessimism of Heard columnists won the day: The average return for Heard writers during this period was a negative 0.5%, while the average reader pick lost 5.8%. Note, however, that the S&P 500 rose 4.2% over the same period, meaning investors would have been best to sit out of the whole meme wars and embrace the average.

These results are yet another indication that plain old index funds, not online message boards, have been the biggest democratic innovation in finance. Even the original Robin Hood himself might admit it.

This story has been published without modification in text from a wire agency feed