The purpose of the Random Portfolios is to test the theory that money management is more important than stock selection when investing for the long term in the stock market.
How the Random Portfolios were created
The Random Portfolio-1 is made up of 20 randomly selected ASX-listed stocks from a field of 213. The larger field is made up of stocks which satisfied 2 criteria. They had to have a market capitalisation on 8 April 2011 of between $50 and $250 million and the share price had to have had an average annual increase over the past year of at least 10%. A random number generator was then used to pick the 20 stocks. The stocks listed below are those chosen.
The Random Portfolio-2 is also made up of 20 randomly selected ASX-listed stocks from a field of 208. The larger field is made up of stocks had a market capitalisation on 15 April 2011 of between $10 and $50 million and the share price had to have had an average annual increase over the past year of at least 10%. A random number generator was again then used to pick the 20 stocks. The stocks listed below are those chosen.
The Random Portfolio-3 is made up of the 20 ASX-listed stocks which satisfied 3 basic criteria. They had to have a market capitalisation on 15 April 2011 of more than $15 million. They had to have a price of between 1 cent and 5 cents and the share price had to have had an average annual increase over the past year of at least 10% but no more than 150%. This yielded only 24 stocks. I used a random number generator to remove 4. The stocks below are the remaining 20.
All three portfolios will follow the same money management rules.
