CAPITAL IDEA

Check out this DUMB but EFFECTIVE investment strategy for 2016

You can’t spell “market capitalization” without “capitalization.” That’s the sort of insight that shrewd investors use to beat the market.

The two top-performing stocks in the S&P 500 index this year are chipmaker NVIDIA and pipeline operator ONEOK. Both of these boldly named companies—lowercase letters are for wimps—have roughly doubled in value since January, as highlighted by Bespoke Investment Group.

“It seems pretty clear that the best strategy this year has been to have a company name with all caps,” the research firm joked in an email to subscribers this week. “With that in mind, going forward we’re going to be called BESPOKE INVESTMENT GROUP… When and if having all lowercase letters becomes the hot new trend, we will change accordingly.”

Now, there are thousands of exchange-traded funds tracking all sorts of nutty strategies, so is investing in COMPANIES WHOSE NAMES ARE IN ALL-CAPS any worse? Quartz constructed an index of the 10 largest US companies by market value with the boldest, brashest corporate monikers. (Acronyms were excluded, because that’s cheating.)

Lo and behold:

The system works! Six of these 10 companies have outperformed the S&P 500 so far this year, and when grouped together our ALL-CAPS PORTFOLIO is trouncing the broader market. Confident companies have confident names, it seems.

But before you shift all of your savings into NVIDIA, ONEOK, QUALCOMM, and the like, consider that this strategy has failed pretty miserably in the recent past, lagging the S&P 500 in three of the previous four years. As always, in investing it generally pays in the long run to opt for broad-based, low-cost index funds. Anything else is likely a money-losing gimmick instead of a (caps) lock.

The ALL-CAPS Investment Portfolio

Stock 2016 performance (to Oct. 25)
NVIDIA Corp. 118.1%
ONEOK, Inc. 99.4%
IDEXX Laboratories, Inc. 52.2%
QUALCOMM, Inc. 35.5%
SCANA Corp. 17.8%
PACCAR, Inc. 15.6%
S&P 500 index 4.9%
DISH Network Corp. 2.8%
DENTSPLY SIRONA, Inc. -6.7%
AMETEK, Inc. -16.4%
NIKE, Inc. -18.3%

Cropped feature image by lincolnose under license CC BY-SA 2.0

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