Random Stock Picker

What this is, and what it is not

Press the button and it returns a ticker drawn from a list of roughly ten and a half thousand US-listed symbols, spanning the major exchanges rather than any single one. Press it again and it returns another. There is no analysis behind it, no screening, no ranking, and it is not pretending otherwise.

So it is worth being plain about the two things it is for, before anything else.

It is a way to find a company you would never have looked at. Anybody researching stocks develops a rut. You read about what is in the news, what your feed shows you, what you already own. A random draw ignores all of that, which is occasionally how you learn a whole industry exists.

It is a demonstration of an idea. Random selection is not a joke in finance. It is at the centre of one of the field's most consequential arguments, it has been tested publicly for years, and the results are more interesting than either side usually admits. That argument is most of this page.

What it is not is a recommendation. A ticker arriving on your screen says nothing about the company behind it, and this page ends with the honest version of what to do with one.

The blindfolded monkey

In 1973 a Princeton economist named Burton Malkiel published A Random Walk Down Wall Street, which applied the mathematics of random walks to what people on Wall Street actually did for a living. His conclusion was that share prices already reflect available information, so future movements cannot be predicted from past ones.

Then he wrote the sentence that followed him for the next fifty years. Taken to its logical extreme, he said, the theory means a blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts.

It was meant as an illustration of how hard it is to beat a market, not as investment advice. But it is a vivid enough image that it was never going to stay theoretical, and a great many people whose careers depended on the opposite being true took it personally.

The obvious next step was to test it.

Fourteen years of throwing darts at the stock tables

In October 1988 the Wall Street Journal started a contest to do exactly that. Four stocks chosen by investment professionals against four chosen by throwing darts at the stock tables, with performance compared afterwards.

Malkiel threw the first dart himself.

Staff played the monkeys, the paper citing liability insurance among the reasons for not using actual monkeys. The contest ran for about fourteen years, drew in more than two hundred investment professionals, and was retired in 2002.

The results after the first hundred contests:

Read those two rows in order, because the second is the interesting one and it gets quoted far less.

The pros beat the darts, comfortably enough that it is not chance. Losing 39 times out of 100 to a dartboard is nonetheless an awkward record for a profession that charges for the difference.

Against simply owning the index, though, the pros were level. Fifty one to forty nine, before any transaction costs or taxes are counted, and those costs fall on the active side rather than the passive one. Adjust for them and the edge points the other way.

So the contest did not vindicate the monkey. It landed somewhere more uncomfortable: professional selection beat randomness and did not beat doing nothing.

Why the result gets misread in both directions

Both camps quote this contest and both are being selective. Malkiel, who started it, said from the outset that it was not a fair test of his theory, and his objections are worth knowing because they are methodological rather than defensive.

Four stocks is not a portfolio. The whole point of the efficient markets argument is to hold a broad cross section of the market. Four picks is a small enough sample that luck dominates. "The darts were a nice metaphor," Malkiel said, "but four darts were not what I recommended."

Publication changes the outcome. The pros' picks appeared in the Wall Street Journal. Being named in the largest financial newspaper in the country can move a stock by itself, at least temporarily, which contaminates exactly what the contest was measuring.

Later academic work on the contest found more. The professionals' picks had higher betas than both the market and the dart stocks, meaning they were systematically riskier, so higher average returns would be expected without any skill at all. They also had higher relative strength going in, and there was abnormal trading volume in them before the columns were even published.

And a detail that says a great deal: the dart stocks tended to perform well after each contest ended.

None of which settles the argument. What it settles is that a light hearted newspaper feature was never going to settle it, and that anybody citing it as proof of either position has not read the footnotes.

The final contest, running to March 2002, had the darts lose 17.8 percent while the Dow rose 12.7 percent. A fitting end, in that it proved nothing at all.

One random ticker is the opposite of the lesson

Here is the point where this page has to be straight with you, because it is easy to draw exactly the wrong conclusion from everything above.

Malkiel's argument was never that individual stock picks are safe. It was that a broad cross section of the market is hard to beat, and that spreading widely removes risk you are not paid for taking. The monkey was throwing darts at a whole page and building a portfolio, not selecting one company.

A single random stock is the exact opposite of that. It is undiversified in the most complete way available. Whatever happens to that one company, good or catastrophic, happens to your whole position.

Consider what a US listing can actually be. Enormous, profitable, decades old. Or pre revenue, thinly traded, one clinical trial or funding round from being worthless. Both are tickers, both come up in a random draw, and nothing on your screen distinguishes them.

So the honest instruction, and it is short: a random ticker is where research starts, never where a decision ends.

If a symbol interests you, that is what a filing is for. Read what the company does, whether it makes money, what it owes and to whom. Our price to earnings calculator, return on equity calculator and quick ratio calculator are the sort of things that turn a name into information, and all three take figures straight from published accounts.

And the obvious thing said once, because it is true. Investing in shares involves the risk of losing money, and a page containing the word random should be the last place anybody takes a recommendation from. Nothing here is advice about what to do with yours.

What a random ticker is genuinely useful for

Having been sufficiently discouraging, here are four uses that are real.

Breaking your own bias. Everyone's investable universe is smaller than they think, shaped by news coverage and familiarity. A random draw is a cheap way to notice the gap, and occasionally to find a sector you did not know was listed.

Practice. If you are learning to read financial statements, a random company is a better exercise than a famous one, because you cannot lean on what you already know about it. Pull the filings and work out what the business does and whether it is sound. The randomness is the point.

Building a benchmark. Anyone who picks stocks deliberately should occasionally ask whether the picking is adding anything. Drawing a set of random tickers and tracking them alongside your own choices is exactly the dartboard experiment, run on yourself, with no publicity effect to contaminate it. It is a humbling exercise and a genuinely useful one.

Teaching. The contest above is a good way into efficient markets, diversification and the cost of active management, and having a live source of random tickers makes it concrete rather than historical.

What these have in common is that none of them ends with buying the ticker on the screen. The tool generates a question. Everything worth doing happens after that.

Hope the history is worth having alongside the button. If something here does not match a source you have read, do tell us, because this particular story gets retold carelessly and we would rather be corrected than repeat it.

Questions people ask

Should I buy the stock it gives me?

No. A random ticker carries no information about the company. Treat it as a starting point for research, not as a suggestion.

Did a monkey really beat the professionals?

No monkeys were involved. Wall Street Journal staff threw the darts. Over the first hundred contests the professionals won 61 and the darts won 39, so the pros had a real edge over randomness.

So professionals do beat random picks?

Over that contest, yes. Against the Dow Jones Industrial Average they were level at 51 to 49, before transaction costs and taxes, which fall on the active side. Beating darts and beating an index are different achievements.

Was the contest a fair test?

Malkiel said not, and he threw the first dart. Four stocks is too few, publication in the Journal could move the chosen stocks, and later research found the professionals' picks were systematically riskier, with higher betas than both the market and the dart stocks.

Does this mean random picking works?

It means a broad, diversified holding is hard to beat. One random stock is the opposite of diversified, and it carries the full risk of a single company.

Which stocks are in the list?

Roughly ten and a half thousand US-listed symbols across the major exchanges, not one exchange alone. The list is a fixed snapshot, so it will drift as companies list and delist. A ticker appearing here tells you nothing about the size, age or health of the company behind it.

What should I do with a ticker I find interesting?

Read the company's filings. What it does, whether it is profitable, what it owes. Our ratio calculators work from figures in published accounts and are a reasonable place to start.

References

A note on the sources. The blindfolded monkey line is Burton Malkiel's, from A Random Walk Down Wall Street, and the contest it inspired was run by the Wall Street Journal from October 1988 until 2002. The result figures quoted here, 61 to 39 against the darts and 51 to 49 against the Dow over the first hundred contests, along with the finding that the professionals' picks carried higher betas and showed abnormal volume before publication, come from the compilations below. Malkiel's own objection that the contest was not a fair test of his theory is recorded in the Journal's own report of the contest's retirement. Nothing on this page is investment advice.

1. Malkiel, B.G., A Random Walk Down Wall Street, W.W. Norton, first published 1973, the source of the efficient markets argument and the blindfolded monkey illustration.
2. Investor Home, The Wall Street Journal Dartboard Contest, compiling the results of the first hundred contests and the academic critiques, including the finding that the professionals' stocks had higher betas than both the market and the dart stocks and showed abnormal volume before the columns appeared. http://www.investorhome.com/darts.htm
3. Wall Street Journal, The Wall Street Journal's Dartboard Ends Its Run, 2002, reporting the contest's retirement and Malkiel's objections that four stocks were too few and that the publicity effect of appearing in the Journal contaminated the test. http://busecon.wvu.edu/divecon/finance/akurov/FIN322/Articles/WSJ%20Stock%20Picking.htm
4. Priceonomics, How Well Do Blindfolded Monkeys Play the Stock Market?, on the structure of the contest and the interpretation of its results. https://priceonomics.com/how-well-do-blindfolded-monkeys-play-the-stock/