Expert recommendations in the ‘dartboard’ column

For many years the Wall Street Journal’s "Your Money Matters" column has conducted monthly stock selection contests where random "dartboard portfolios" have been pitted against professional stock analysts’ portfolios. In the professional portfolios, four stocks are selected by four experts, while the dart portfolios consists of four stocks randomly selected by Wall Street Journal staff members throwing darts onto a dartboard containing all stock listings from the NYSE, AMEX, and NASDAQ. In both portfolios each stock is given an equal weight of 25 percent. The returns for each stock are computed over a six-month holding period, and the portfolio returns are simply a weighted average of the individual security returns. This paper analyzes completed contests over a six year period during which the experts have won 60 percent of the time (39 out of 65 contests). Furthermore, the returns for the expert portfolios have outpaced those of the Dow Jones Industrial Average (DJIA) on 36 of the 65 occasions. Although interesting, these Wall Street Journal contests fail to include information that may directly impact and alter contest results. This study re-examines and presents the results of past contests, making adjustments for risk. In addition to providing performance statistics for the entire six-year period, we also consider the value of the experts’ recommendations based on their ability to repeat winning performances.