Stock picking champs 2025

0:06Cushkin The best way to invest in stocks, honestly, is to buy a big index with a cheap tracker thing and forget all about it for as long as possible. But just for fun, every year the FT runs a stock picking competition. You pick five stocks, you bet that they will either rise or fall and you leave them to run for a whole year. Now, if you're actually investing your life savings in this way, then really, honestly, you are doing it wrong. Stop it at once. But it's a fun game and all you have to win or lose is your dignity. Longtime listeners may remember that this time last year, I had to sit in the corner with a dunce's hat on.

0:45I bombed pretty badly, came close to last out of literally thousands of people. It was honestly quite embarrassing. Today on the show, which bets did well, which did badly, who's looking ridiculous and who's looking clever? This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist down in the basement of FTHQ in London. And I'm joined, yes, by that great big Rob Armstrong, person from the Unhedged Newsletter in New York. Rob, say hello to the nice boys and girls. Hello, boys and girls. I'll note that I also sat with the dunce cap last year.

1:25It wasn't as big as mine, unfortunately. But I'm also joined in London by the very... But I'm also joined in London by the very excellent Alan Livesey. Alan, welcome back to the show. Hey, nice to be back. listeners think Stanley Tucci but writing about asset management for the FT and you have basically got Alan now listeners I want to be very clear at the top here that none of this is investment advice get an advisor listen to this for fun and remember that we are mostly wrong about pretty much everything um so Alan you're writing up the uh the competition results this year what has worked for people so it it was a year where um mining stocks particularly in precious metals did well and our winner had five precious metal mining stocks amazing yeah all in all pretty much focused on one precious metal which was silver do you know what hats off to this person if you were just purely long silver at the beginning of 2025 you killed it if you liked gold and really thought about it which i didn't enough but because i liked gold at the beginning the you would have probably would have picked silver and that is why that contestant did that he saw it as a you know what i mean by a high beta play a more sensitive play on gold like what kind of returns did they get he was up i think 200 plus percent uh and he had one stock which is actually a footsie 100 company fresneo and it's known as a gold company but actually if you look at it it's 50 50 gold silver and um it was one of the top performers of all the picks i mean it was number two.

3:19It was up 300 plus percent. This gold silver thing is a good instance of a general rule in markets that if thing X has a great year, thing Y, which is a lot like X, but is slightly crappier, will have an even better year. Well, they got that so right. I mean, there has been, to be fair, At the end of the year, there was a bit of a kind of, whether it was just a narrative or not, a bit of a short squeeze on silver. You know, there was talk of reducing imports into the United States. Yeah, so that kind of forced it higher. Yeah, so there is a number of sort of last quarter melt-up, as you like to say.

4:02I would like to utter the L word at this point. Which is? Luck. Yeah, well, there's always a lot of that. Well, if it was you. Armstrong, like sitting on like 200%. I've never experienced luck. I'm just a man who plays bad cards brilliantly. But in the case of everyone else, luck plays a huge role. I take my hat off to this person. But like what else worked for people, Alan? Were people just like all in on the AI trade? Or like what really worked out for people? There was a fair bit on quantum computing. There was something called D-Wave Quantum. and that was a relatively popular pick. Whereas actually Fresnia, which I was just talking about, it was up 379%.

4:51So that's nearly a five-bagger. Think about that. And it's a big-ish company. It's a FTSE 100 company. I think D-Wave isn't nearly as big. It's not tiny. But there were a number of quantum computing stocks. Was there anything that people went into in large numbers that was just a disaster? There were people who tried to short NVIDIA again. Right. They were betting against NVIDIA. Yeah. Yeah, that didn't work out. Shorting Alphabet was not a good idea. So people who shorted those kind of big companies, those on the other hand that shorted things that I think you might have shorted last time, like Strategy, which was MicroStrategy before the CryptoProxy.

5:34they did okay because that that was down 50 plus percent as was trump media whatever it's called the trump yeah the special purpose tmt yeah that was down a lot but not that many people yeah so the reason i got absolutely carted out in last year's competition and rob armstrong called me on this very podcast a full-sized idiot was that i had bet against micro strategy which is now called Strategy, which is one of these companies that does nothing other really than just buying Bitcoin. It's never made a huge amount of sense to me. But while I was short this company, so I was betting against it, the stock went up something like 400%.

6:14It became macro strategy. And I got absolutely annihilated. But I wish I'd stuck with that this year, because in 2025, that stock got pretty hosed and I would have been sitting quite pretty at this points. Can I just interject with one question here, guys? You can. Three of the top four performing stocks in the S &P 500 were from one industry. And I'm wondering if anybody picked these stocks. Computer memory had a bananas year because there was a structural deficit in the market. Plus you had some AI frisson. And so like Micron, Seagate, and Western Digital all were up like 200%. They were. And so it was just an amazing year for those.

7:00Did anybody have those? They did have Micron. There were people who had much more, I would say, traditional semiconductor stocks. Any semiconductor stock. Memory ones. Well, memory ones particularly, yeah. Okay, it's time to name or shame ourselves and talk about how we, the good people of the FT, did. and those of us who are on this podcast did and we will go in order of performance. Alan, gotta hand it to you, man. You absolutely killed it in 2025. Average returns of, get this, listeners, 91%. Alan, what are you doing as a journalist? Why did you ever leave money made? I don't know. I don't know.

7:47This is just, you know, broken clocks and all that. I think once every 14, 15 years. I've been here 12. Well, the funny thing about it is that, as you say, you had two shorts, right? So you had two companies where you were betting on their stock price to decline. Now, if you get a long bet wrong, so if you're betting on a share price is going to rise and you get that wrong, there's not that much that can really go wrong. The most you can possibly lose is 100%. If, however, you bet on something falling and it goes up, your downside is, as I found out with strategy last year, unlimited and extremely painful.

8:24So you were very brave. You had two shorts. You had caring. There's another reason before we get to the shorts. There's another reason that shorting is hard. Most things go up most of the time. Do you know what I mean? Like the chart of the stock market over time works its way up and to the right. And you're betting against that when you go short. Fine go up. But, yeah, so you were betting against Caring, the luxury group, and GAM, the asset management group. And you still did incredibly well. Alan, please tell us your secret. The secret was owning two gold stocks. I picked junior, not tiny little explorers, companies that had profits.

9:11So I wanted that leverage on the operating profits. So I got that with Oceana Gold and something else, DPM. DPM metals. Yeah. And I also picked a totally speculative stock, Rocket Lab, a SpaceX wannabe. It worked. Right. Totally worked. I got my reasons totally wrong, but it worked. You should claim this as an act of pure genius. But the shorts, how did you pick those two short positions? So you may remember Rob Lutz on the podcast, you asked me, what is GAM? GAM, I said, was an investment house, but it is. It's a sort of fund management group. And I just thought reputation had been badly damaged in previous scandals and that it would really struggle.

9:55I couldn't understand why it was still listed. But it did bounce for a while. Actually, I was lucky because it came down a little bit in the last couple of months. It was already down like 95 % or something from the peak or something. So I'm very surprised that you picked this one. It was really a bad idea. Yeah. Yeah. But Caring, what was your thinking there? Caring, I just thought that Pino, who runs it, the sort of owner of it, just was making mistake after mistake. And Gucci wasn't firing well. And it's a very important brand for Caring. And you were on the right side of a bad year for luxury generally, right?

10:35I mean, it's been a tough year for luxury, mostly because of China. That's a longstanding headwind, but it continued this year. So, Alan, you can take your place as the best performing FT journalist in this competition this year. Now, overall in the FT, because there are some people who are not journalists in the building who also play along. But overall in the FT, I have restored my dignity, ladies and gentlemen. I was fourth within the FT. And I came like 82nd out of a thousand and something people overall. So I am all in favor of this game, actually, now I've decided. Tell us about the philosophy of your portfolio.

11:18And did it work for the reasons you thought it was going to work? Yes. Yes, I was very clever. I made like 67.4%. Pretty sweet. And I was just long all the way up and down of European defense companies. That's it. And they had an absolutely storming year. So I feel like for once. Yeah. Applause every year. Yeah. Because my thinking was if I did really, really badly again this year, I was going to stop playing and just get in a mood. But now I'm all in. Here's the crucial question, Katie. I just want to stick to this defense theme. Were those stocks already doing well when you started the contest in January?

12:04In other words, did you get on a trade that already had momentum? I did get on a trade that already had momentum. And there was a part of me that was thinking like Rheinmetall, for example, makes like defense stuff in Germany. It's just like had an absolute crackerjack few years. I was thinking, oh God, I kind of believe in the theme, but I do wonder if these things are getting a bit juiced here. But no, they had a lot of gas left in the tank. And when I talked to investors about, you know, what are you doing with your portfolios for 2026? Pretty much all of them I speak to say, we like Europe an awful lot more than we have done in the past.

12:40And within Europe, we like green energy. We love banks. God, I wish I'd been long banks. European banks had a fantastic year. And we love defense. and so yeah the defense trade did exceptionally well for me so i'm feeling very pleased with myself i think that's an instance of an old rule of stock picking which is let your winners run in other words just because something's doing well doesn't mean it's going to stop doing well on the contrary it increases the chance that it will continue doing well you know so we know this this game encourages you to let your winners run yeah exactly and there were there was a period like Late in 2025, when some of the European defence stocks came off, they started falling because people thought, oh, there's going to be peace in Ukraine.

13:25Quite why people thought that was going to happen imminently. I'm not sure. And I was thinking, oh, no, not again. But it all came good. But so, Rob, I mean, you did pretty well. You were 23rd within the FT crew with an average performance in your portfolio of 23%. This is good. Yes. Beats the index. It just doesn't beat me. No. Which I'm going to go on about. Yes. I'm sure we'll hear a lot more about that for the remainder of this show and perhaps in future shows. However, I mean, I play the game slightly differently. I only pick from the S &P 500 because those are the stocks I always write about.

14:05So I figure I might as well go into that pool. And in my own head, I'm just trying to beat the S &P. In earlier instances of this contest, I went for really high risk stuff and tried to kind of shoot the lights out. But now I try to actually build a portfolio of five stocks I could actually feel good about owning. So I'm kind of pleased that it was mission accomplished this year. But a couple of big winners. The biggest winner was Google. I went long Google for a couple of reasons. One, Aiden, my former protege here at the FT, was shorted. and I wanted the chance to say nanny nanny when he was wrong.

14:51So for the record, nanny nanny. Nanny nanny. Yeah, isn't it? And two, the stock had the cheapest valuation of the Magnificent Seven. I saw the momentum in the Magnificent Seven. I don't want to be left out of that for another year. So that turned out to be a good call. And I thought, if you remember a year ago, there was a lot of talk about Google and Apple. Google, I should say Alphabet. Alphabet has this deal with Apple where they pay to be the default search engine on Apple. It's quite a lot of money. And I thought that was kind of win-win. Like if they're no longer the default search engine, no one will switch and they won't have to pay the money anymore.

15:40It was a case in court whether they were allowed to do this. and if they win, people will think it's good news. We got a kind of muddled verdict. That worked out fine, but the real thing was, the thing that made Alphabet go bananas this year was the fact that at the beginning of the year, people thought it was a laggard in AI, and by the end of the year, everyone thought it was a leader in AI. And, you know, that's what really made the thing go up. Yeah, you played that one nicely. But so when we all put our little picks into this competition, and you had to put a reason along with each of them.

16:14Well, you didn't have to, but you could put a reason along with each of them. And your theme for 2025 was boring. Yes. Boring wins in 2025, you said. I think you were wrong about the boring, but right about the portfolio. Well, let me say this. One of my boring picks did really well. I picked a company that people who are not on Wall Street or in the healthcare industry won't have heard of it, but I picked McKesson, which is a big American company that distributes drugs. So they're like, get the pills to the drugstores, basically. You know what I mean? And when you think about the number of drugstores and the amount of pills we take, this is quite a big job to do.

16:53And they're one of several large companies that do this. And it did very well because I think people did want a boring stock. Healthcare is the paradigmatically boring and steady industry. but most of healthcare was under political pressure from the president. So the pharma industry was under, you know, price pressure, political price pressure. The health insurance industry was under political pressure. So people who wanted a boring healthcare stock had very few options. McKesson was one of them and the stock did well. So that version of boring did quite well. Thank you very much. Thinking of boring, you managed to pick a company so boring that it's called waste management.

17:42Waste management takes trash away and disposes of it. So it's pills, trash, internet, and then you had Vulcan Materials. Yeah, which literally makes big rocks into little rocks. It's an aggregates company. Rocks and J.P. Morgan. And J.P. Morgan. So not bad. 23 % of your portfolio. I feel like it's a pretty low-risk portfolio that did pretty well. So, you know, I'm quite pleased with myself. Thank you very much. So Nick McGaw, who sits next to me in the office, he's from the Lex column. He picked companies that all sounded a bit like his name. Anyway, that didn't go very well. What are those? One did.

18:23One was actually called Nick something in Australia. It was like Nike and like various other things that sounded a bit like Nike. Nike had a tough year. As a strategy, didn't go that well. But he did do better, I'm pleased to say, than Kadim Shuba, who did so spectacularly brilliantly last year and who said he was going to retire from the game if he won it again in 2025. Well, ninky ninky nana, Kadim, because you have bombed and so you're going to have to play it all over again. He won, as I remember, he won the contest last year just going all Bitcoin all the time, right? Yeah. All crypto. Yeah, so it serves him right.

19:01If you're listening to this and you do pick stocks for a living, let us know your secret on hedged.ft.com. Alan and Rob, we are going to have to come back in just one second with Long Short.

19:18Okie dokie, it is time for Long Short, that part of the show where we go long, a thing we love, or short, a thing we hate. Alan, like a good little soldier, you have prepared something, have you not? I am short the dollar. I think the dollar will keep going down. You know, the beginning of last year, I thought that Mr. Trump would continue to throw rocks at the Fed. He has now raised the size of those rocks to boulders. And he's rolling them down the hill towards the Fed. So I don't see how that gets any better. Yeah, you could be right on that one. God, that's quite brainy, isn't it, Rob? What have you got?

19:55I have a serious one. I am along the people of Iran. I think this is a great civilization and a great country that has suffered under what I think is a terrible regime for a long time. I don't know what's going to happen there, but Godspeed to you, Iranians. We're with you. Civilized people everywhere wish you the best. So we got our fingers crossed in a terrible, terrible situation. So I am sure, listeners may be aware, I'm not a fan of prediction markets. I remain not a fan of prediction markets. I am short of them, and I think we should stop pretending or acting like they are real markets. They are not.

20:40So these are markets where you can bet on anything. Is it going to rain tomorrow? What's this sports result going to be? Who's going to win this election or that election? And so news today from a bunch of our colleagues, trading groups are expanding into prediction markets, hiring traders to arbitrage fleeting price discrepancies between contracts for events like football games and elections. Stop it. This is just, none of this is going to end well. People just betting on anything and everything and thinking that it's like a kind of, almost like a regulated financial market. Honestly, knock it off.

21:14This is all going to end in tears. is lose your money betting on stocks instead of betting on this sort of nonsense. That's what I say. Listeners, we hope this has been instructive to your investment plans for 2026. But please don't take our word for anything. We will be back in your ears on Tuesday. So listen up then. Unhedged is produced by Jake Harper and edited by Brian Erstad. Our executive producer is Jacob Goldstein. We had additional help from Topher Forges. Cheryl Brumley is the FT's Global Head of Audio. Special thanks to Laura Clark, Alistair Mackey, Greta Cohn and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free.

21:55A 30-day free trial is available to everyone else. Just go to ft.com slash unhedged offer. I'm Katie Martin. Thanks for listening.

22:25We'll be right back.