In order to test the hypothesis - that the relatively random portfolio has as much chance of outperforming the index as the carefully crafted selection - we have resorted to child labour. Sam Griffiths (age four years and seven months) was enlisted by his father, our City editor, to pick six shares. The method chosen for the selection was not entirely random. Sam was asked to rummage through the Christmas cards sent by quoted companies to our offices over the holiday season and select the half dozen he found most attractive.
This is reckoned to be a much more sophisticated selection technique than, for instance, having chimpanzees sling darts at a copy of the Wall Street Journal. Unfortunately, introducing this element of judgement into the process exposes the participants to the flaws of human nature that have been the undoing of so many share portfolios.
Sam immediately undermined the integrity of the process by demanding where the card from McDonald's was - Sam is a big fan. The disappointment on his face when he was told the burger chain hadn't sent us a card was as great as when he learned that the local branch had run out of 101 Dalmatians figures to accompany his Happy Meal.
The procedure was in danger of turning into a disaster when the first card Sam picked was that sent by Northern Electric. The snowman in the fridge was irresistible but how do you explain to a four-year-old that the company has lost its independence? Given that the Takeover Panel failed to offer a compelling explanation to a more adult audience, there was no option but to offer a shabby compromise.
McDonald's was promptly reinstated as Sam's nap for the year while the Northern card was dispatched to the recycling pile. From then on it was plain sailing. After careful consideration, the recycling pile grew and the chosen cards were proudly handed over.
Pride of place went to Orange where the picture of a little boy riding his bike down a snowy lane had Sam longing for life to imitate art. The British Gas card of a tree with a tempting array of presents evoked memories of the Christmas just past. Similarly, the Boots card with a bright red Christmas bow had Sam recalling recent unwrappings.
Allied Domecq had Santa in a balloon, prompting a series of unanswerable questions about what had happened to the reindeer. Finally, BAT's card with its snowflakes was selected out of wishful thinking from a boy who was desperate to build snowmen, throw snowballs and ride his bike down a snowy lane.
McDonald's pounds 26.70
Orange pounds 1.88
British Gas pounds 2.21
Boots pounds 6.19p
Allied Domecq pounds 4.44
BAT pounds 4.83Reuse content