When Orlando won The British Observer newspaper's 2012 stock picking challenge, people were surprised. Orlando had managed to beat three professional investment bankers from top quality houses and a team of high school students from Hertfordshire. He had shown all the necessary qualities that it takes to be a successful banker- he was ruthless, determined and focused, so it shouldn't really have been a surprise that Orlando beat the others. Except Orlando is a cat.
By the end of the year Orlando had turned his £5,000 investment into £5,542.60, earning 11.06% return. In comparison, the professional investment managers had turned theirs into £5,176 pounds with a return of 3.52%- three times less than the cat. The students actually managed to lose money, ending at £4,840 making Orlando the clear winner. He certainly was the cat who got the cream.
This of course raised questions about the skill involved in reading the stock market- if a feisty feline can beat expert professionals there must be good reasons:
- Humans, like many animals are a pack species. They travel in herds (well, cliques) and enjoy the company of others. Cats, rather than following the pack, are independent and think for themselves and do not worry about not following the herd. Their seemingly odd stock choices are therefore carefully planned even if they seem off the wall to everyone else.
- Cats are immune to affection. Sure they'll enjoy the odd tickle under the chin but their rare outbursts of affection are usually for an ulterior motive- and of course they always get their way because they are so darn cute. This gives them the perfect strategy to butter-up associates.
- Cats are logical. Whilst humans can get side-tracked and influenced by emotions, cats far favour reason. They would never let something as silly as feelings interfere with a professional business decision, and their ruthless approach serves them well in the stock market.
- Humans are trusting and form relationships with co- workers, a major error in a cat's eyes. Cats are aloof and depend on themselves for every decision- why would you rely on someone else who is just waiting to sneak in and steal your catnip?
- They are curious risk-takers. Humans sometimes play the safe card and are afraid of gambling, especially when it comes to money. Cats on the other hand frequently hurl themselves off roofs without any concern of the landing- they know they'll always land on their feet. Additionally, they are curious and not afraid to dabble in unknown markets. Perhaps it's because they have nine lives, but in this case, curious definitely didn't kill the cat.
- Cats favour consistency and dislike change immensely. For this reason they favour stocks that show consistent high standards and don't waste time indulging themselves in quick return hit and runs. At the end of the day they need stocks that will keep them in an increasing supply of whiskers.
So, it might be random luck or it might be pure, calculated skill on Orlando's part, but what has been shown is that the stock market is so unpredictable that even a cat can beat professionals with decades of experience. Will the world soon be overrun by fat cat bankers?
