Why Cats Make Better Stock Pickers Than Dogs

Email

The British Observer newspaper's 2012 stock picking challenge was won by an unusual competitor: a cat called Orlando.

When I saw this, I wasn't surprised. Cats, unlike dogs, have the ideal abilities and temperament for stock selection.

The Observer set up its challenge with three competitors: a panel of three professional investment managers from top quality houses, a team of high school students, and Orlando. Pretty tough competition for the cat, one would think.

Yet at the end of the year, it wasn't even close.

Orlando had turned his 5,000 pounds into 5,542.60 pounds, the professional investment managers had turned theirs into 5,176 pounds and the high school students had managed to lose money, ending at 4,840 pounds, a sad commentary on the quality of modern British education.

By year's end, Orlando earned an 11.09% return, more than three times the 3.52% gains the professionals delivered.

Orlando's one difficulty was the cat/portfolio interface. He picked his stocks by throwing his toy mouse onto a grid containing code numbers for each company.

Of course, skeptics suggested that this added a random element to Orlando's investment selections, but that's nonsense – anyone who has watched a cat juggling a toy mouse can observe that its activity involves a very high level of coordination, and is far from random.

Still, there's no question the cat/stock interface needs improvement, but here science should be able to help.

Just as Babel Fish and the like have enormously simplified the task of translating even obscure foreign languages, can anyone doubt that in just a few years they will be able to translate balance sheets and business plans into the meows, purrs and hisses necessary for quick feline comprehension?

This won't work for dogs, which have completely the wrong approach to life to ever be successful investors.

Dogs are herd animals, rushing madly in the same direction as the rest of the pack. Thus it was no surprise when it was recorded that there were many dogs making share applications in the Facebook IPO.

Dogs are also trusting, a hopeless personality trait for success on Wall Street.

Cats on the other hand are by nature contrarian, objecting strongly if other animals intrude into their chosen investment sector. Their inquisitiveness helps them find values in obscure corners of the market.

And their hatred of disruption and change helps them identify long-term value propositions, avoiding fly-by night losers.

Cats are also noted for their intense focus on regular feeding. For this reason they indignantly reject stocks that don't pay dividends. They also have no interest in companies that make large share buybacks, gorging their shareholders in good times, then come back begging for more capital in downturns.

The feline favorites are companies that have paid regular dividends for decades, ideally the "heirloom stocks" that have increased their payouts for 30, 40, or even 50 years.

Food that arrives with complete reliability and regularity for decades, the portions gradually increasing over the years, is a cats' dream, and their investment preferences reflect this. Studies will show you that this feline selection technique has substantially outperformed the market, in bull and bear periods, for decade after decade.

Clearly, the professional British investment managers could learn a lot from Orlando, and so can the rest of us.

Related Story Links:

Join the conversation. Click here to jump to comments…

  1. Faye Lapp | January 23, 2013

    I'd bet Orlando is now not only a pet, but a valuable industry asset.

    • no code | April 22, 2013

      I could use a rase,and please get rid of the stupid dogs(ps-cia operations/be advised that they took the bait)

  2. Duane Buckingham | January 23, 2013

    I do not always agree with your opinions, but your writing skills are extraordinary. I cannot think of a better way to teach the fundamentals than by injecting a bit of Orlando humor. Greatly enjoy reading your articles and have learned much for those. Thanks.

  3. Benny the Cat | January 23, 2013

    You are a true scholar and so correct. Cats are much better stock pickers than dogs and most humans. I have first-paw experience at this as for 2 years, I published stock picks every Sunday night. I had an 84% hit rate and got fan mail from the anchors at CNBC. Another thing proves that cats are smarter than dogs…You never see a whole team of cats strapped up to a sled… Meow for now, Benny.

  4. Brad | January 23, 2013

    My cat battlecat outperforms me each year in the markets…then I get out the laser pointer and get her running around and I move her profits to my account…and give her some fancy feast and we both become winners!

  5. sameer | January 25, 2013

    Ornalndo Is new " Paul The octopus "

  6. David Melby | January 26, 2013

    No faux paws here as I always confer with my Norwegian Forest cat when selecting dividend stocks. While we haven't matched Norway's soverign wealth fund in total wealth, we do consistently out perform the so called experts. I always applied same principle with women, liking women who prefer cats to dogma.

  7. Peter G. Curtis | January 28, 2013

    ME-OW

  8. Carole Blair | March 18, 2013

    Fun reading

  9. Richard Ellicott | April 4, 2013

    this is so true, cats would back out of a market the moment they sense danger, dogs runs run headlong into it, they don't care that beefstocks are falling they see inflation differently

Leave a Reply

Your email address will not be published. Required fields are marked *


− one = 4

Some HTML is OK

© 2014 Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201, Email: customerservice@MoneyMorning.com