About a year ago, a group of Reddit users organized to beat the market by investing en masse in doldrums to beat the large traditional investment groups, which had shorted them (betting their value would fall). They managed to skyrocket the value of stocks like GameStop, AMC or BlackBerry, causing those big funds to lose a lot of money along the way. In Forocoches, perhaps the closest thing to a Spanish Reddit, some users suggested organizing to achieve something similar from SpainAlthough the operation of our market and the strong regulation behind it made success unlikely.
With less haste but with the same faith, we decided to periodically track the investment ideas that were announced on Forocoches to see if by the end of 2021, almost a year after that, they had been successful. Of course, we have not operated following these ideas, nor are they recommendations for anyone, nor should they be taken as anything other than what they are. And of course, less than a year is a short enough period of time to consider nothing conclusive. Even so, we wanted to try.
Spanish, American and Chinese
Saying ‘Forocoches’ immediately evokes its general sub-forum, the most famous in the popular imagination for its everyday atmosphere and for everything that appears on the news from time to time. There are many more sub-forums with a much more serious tone, including one where investment is specifically discussed, but to maintain the traditional spirit of the idea, we narrowed the search for these ideas to the general sub-forum. The one with shurs, the Clios on fire and the montages with Pepe Viyuela. The idea is to “invest” about 2,000 euros in each recommended action, choosing the least argued or most convincing up to a ceiling of about 50,000 euros, a budget much more than reasonable to start investing.
Threads in which investment ideas are discussed or in which a user exposes their portfolio and exchanges impressions with others are not the most common type of content in this sub-forum, but from time to time some do appear. Thus, at the end of December 2020 we decided to make our first investment in NIO, a Chinese manufacturer of electric cars to which a shur Alicante advised investing. To date it has not evolved very well, it has lost 14% of its value.
At the beginning of January, another user suggested investing in various Spanish stocks or closely related to Spain (such as IAG, owner of Iberia, with corporate headquarters in London and fiscal in Madrid) arguing that they had lost too much value due to the pandemic, something that should be corrected soon. Those companies were the aforementioned IAG, Telefónica, Mapfre, Repsol, Santander, Meliá and Merlin, of the real estate sector. Some have had profitability that without being notable are not bad at all in a context of negative interests, others supposed certain losses (not tragic either) and the aforementioned Merlin achieved the best profitability of this package, with almost 29% profitability in ten months .
The basic idea, to invest about 50,000 euros distributed in 2,000 per company following the recommendations in Forocoches
At this point, it is worth highlighting how, in general, Forocoches agree that the IBEX (the stock index that groups together the 35 largest listed Spanish companies) is not a good idea to invest, betting instead on the NASDAQ (New York Stock Exchange). ) or by the indexed investment, which does not buy specific shares, so it is not suitable for this article.
The rest of the companies that appear as investment ideas with some argumentation behind are born above all in a specific thread where the forms were saved in a way not too usual in the forum. There they are all Americans, except the Chinese Alibaba. We are simulating our investment of 2,000 euros approximately in all of them:
- Just Eat
- Eloxx Pharmaceuticals, farmacéutica
- Futu, digital wealth management platform
- Texas Instruments, semiconductores
- Johnson & Johnson, farmacéutica
- Atlassian, software corporativo
- Palantir, data analysis
11.95% profitability in less than a year
What happened to our investment at the end of November 2021? The 47,524.54 euros invested have become 53,204.82 euros, an 11.95% return, to which the purchase and sale commissions of the chosen broker would have to be deducted, around 1,000 euros in total for the fifty operations, approximately, in the case of the most expensive brokers. You also have to subtract taxes, the Treasury takes around 20% of the annual profit from closed operations. We leave the complete table with the companies, dates, entry prices, current price, entry capital and current value, as well as the conversions to euros in the case of foreign shares, together with the profitability calculation of each one.
The company with the highest profitability was Nvidia (144.97%), followed by Tesla (92.17%) and Atlassian (72.68%) counting from the day the idea of investing in them was published. The least profitable, Eloxx Pharmaceuticals (-55.19%); Alibaba (-44.9%) and Futu Holdings (-44.72%).
A 12% return in less than a year is a very desirable figure for many investors, especially for those who are more conservative. who seek to make profitable their savings and protect themselves from inflation, without aspiring to great deeds that change their life and therefore without assuming too much risk. If we compare it to benchmarks, it falls well below the NASDAQ since we started investing in various companies (around 47% at this time). Although of course we would not have lost the 22% that the IBEX has left since then. A matter of perspective.
Beyond comparisons with indices, 12% is not a memorable milestone either in a context of a bullish American market, which left the worst of the pandemic behind as a short-lived crisis, and which has been on an almost permanent rise for more than a decade, a context much more favorable to scratch a few euros a year than if we lived a bearish stage with markets with zero or negative growth for years. Although more and more voices are warning of a correction that will come sooner rather than later. And of course, far from being able to multiply the investment by various magnitudes as those who wanted to find the next GameStop at the beginning of the year wanted. At the moment, 12% up in Forocoches. Even by the loles.