By Yoon Ja-young
Staff Reporter
Are stock investors making smart choices in picking stocks? An experiment in Seoul shows that many of them may not be doing so ― a parrot turned out to be making smarter choices than human beings.
In a stock investment competition held by Paxnet, an online stock market information provider, from June 25 to Aug. 5, a five-year-old parrot from Papua New Guinea beat most of the participating stock investors.
The female parrot, named Ddalgi, or strawberry, competed with 10 stock investors who have invested in stocks for 7.5 years on average.
Each investor, including the parrot, started the game with 60 million won in cyber money, and traded 10 million won worth of stocks for each transaction.
The human investors could pick any stocks they wanted, but the parrot picked from among only the top 15 stocks in terms of market cap of both the main bourse and the junior stock market, Kosdaq.
The parrot, started the competition with 30 million won shares of Samsung Electronics, the country's top conglomerate, and 30 million won shares of Megastudy, a private education giant in the junior Kosdaq market. Then, every Thursday, Ddalgi picked from the 30 balls bearing the names of the 30 companies to replace part of the stocks in her portfolio.
The parrot bought stocks seven times beginning June 25, and now holds shares of Megastudy, Sungkwang Bend, KT&G, KEPCO, SK Telecom and Taekwang.
The feathered investor recorded a 14.5 percent investment return as of Monday, while the 10 human investors averaged a 0.6 percent loss. Only two investors outperformed the parrot, with seven investors in minus territory. One of them, with 19 years of experience, recorded a 23.5 percent loss.
``Those who trade stocks on short-term basis are performing poorly,'' said Chung Yeon-dae, the general manager of Paxnet.
While the avian investor has bought shares only seven times, most of the human investors have made over 160 transactions so far. One has traded shares over 1,200 times during the five-week period.
``On top of making short-term transactions, the investors usually bet on small- and medium-sized shares that fluctuate hugely,'' Chung said. He added that many of the investors were shocked to perform worse than the parrot. ``They know in theory that one should make long-term investments and choose blue chips. But few people do that in reality.''
There have been a number of similar competitions between stock investors and animals, including a chimpanzee. The animal investors were designed to make long-term investment in blue chips, as in the case of the Ddalgi. ``The animals won in most of the cases. It seems to prove the efficient market hypothesis, which says it is hard for investors to beat the market,'' Chung said.