‘Goldies’ lead Cristal Challenge stock-picking competition
Investors who picked gold mining stocks are leading the Cristal Challenge — a fun stockpicking competition inaugurated in 2021 that highlights the best and worst performing stocks on the JSE.
JSE stalwart David Shapiro, who has spent more than five decades as a professional investor, originally started the competition with 15 people, to popularise investing on the local bourse. This year more than 200 participants are in the race — with each choosing five stocks.
Of those in the lead, three of the top five have chosen at least one gold mining stock — which have gained due to a rise in the gold price.
Participants who chose stocks that have lost value such as Transaction Capital, Renergen, Purple, Murray & Roberts and Steinhoff have plummeted in the competition standings.
The challenge highlights the big question of whether investors should put their money into individual stocks over index trackers and collective investment schemes.
An index fund follows the performance of a group of stocks and is a passive form of getting into the market, with the benefit of low fee structures.
The winner in 2021, who placed fifth in 2022, pianist Betsie Schaap has not been so lucky so far this year, and is sitting in the bottom eight. Herman Lloyd, who won last year, is in fourth place now, but finished last in 2021.
Warren Buffett famously won a bet after saying it is extremely hard to consistently choose winning stocks year after year and that index tracking does better over time.
“Honestly, if we were able to get it right every time we would be sitting on our own private islands,” said fund manager Makwe Masilela who thinks the competition is a great idea.
On the 2023 iteration, Shapiro says so far the leaders, just over three months in, are the “goldies”.
Gold Fields is up about 56%, AngloGold Ashanti 52%, DRD Gold 51% and Harmony 43%.
But Shapiro says that history shows that gold shares go down as fast as they go up. “It’s such a fickle market”. And yet while gold shares are skyrocketing, platinum shares are going the other way.
Anglo American Platinum is down 30%, Impala Platinum 22% and Northam 17%.
Gryphon analyst Casparus Treurnicht, who is not a fan of the competition or active stock picking, says “we have always suggested that an investor will be much better off investing in an index fund than picking individual stocks”.
“Sure, you will have years where a certain investor does very well, but consistency is key but very hard to maintain. The research has proven this.”
“I think the game would change if individuals started investing actual money. Then it becomes even more emotional as stock picking destroys even more value.”
Masilela is more nuanced:
“It’s not easy to beat the market consistently”, but you still get investors who are quite steady.
The difficulty of stock picking has not stopped everyday participants joining in. These include 2023’s leader, engineer Richard Thomason and surgeon Anthony Jackson, who is running third. Others include teachers, a marketer, a pastor, a pensioner, journalists and a pilot.
One of the top five in the first quarter, Aeon Investment Management fund manager Zaid Paruk said there was value in the initiative as it allowed people from all backgrounds and professions to compete on a level playing field in a fun way.
“With such a low savings rate in SA, any form of encouragement regarding investing can go a long way. It illustrates that people from all walks of life can compete, making investing less scary for those that may think they do not have the qualifications or education,” Paruk says.
‘WITH SUCH A LOW SAVINGS RATE IN SA, ANY FORM OF ENCOURAGEMENT REGARDING INVESTING CAN GO A LONG WAY’