Wealth Management Investment Competition 2017-2018 and Last Year’s Results

Last year 163 participants answered 20 demanding propositions put to them as if they were an Investment Analyst / Economist in the Wealth Management Investment Competition. Overall the profession did pretty well with a 62% hit rate. Some did very well – two with 100% hit rates – while others have much explaining to do! Are you willing to go again for 2017-18?

The following table shows the propositions, initial level from a year ago and the closing level. If you had answered ‘No’ to every proposition you would have done quite well. The correct answer was ‘No’ for 18 of the 20 propositions. Generally the ‘Bulls’ did much better than the ‘Bears’. 

Top ranking participants for the 2016-17 Competition

Each participant started with 20 points. Applying the scaling factors (see previous articles for the scaling factor applying to each proposition) to the responses of each participant gives a final score. The top score was 38.08. The bottom score was 7.99. The median score was 20.3.

The following table shows the top six participants in the competition. Amazingly both Colin Grenfell and Stephen Woods didn’t get any proposition wrong. Colin got 18/18 with two ‘unsures’. Stephen got 14/14 with six ‘unsures’. Mudit Gupta got 18/20. Chao Gan got 17/19 with one ‘unsure’. Adrian McGarva and Ben Trollip had identical responses. They got a super impressive 19/20, but missed out by saying ‘yes’ to the high scaling proposition that Japanese 10-year bond yields would remain negative. Oh, so close.

The person who responded ‘unsure’ to all twenty propositions finished on 20 points!

This Year’s Competition

As with last year’s competition, you will be given twenty propositions relating to investment markets. For each proposition you must answer: ‘yes’, ‘no’ or ‘unsure’.

At 30 June 2018 your Portfolio Manager boss will then assess how well you have performed. Hope you do ok! It might be your last chance if you had a tough 2016-17.

Each proposition will be scaled depending on the responses from other participants in the competition. For a proposition which receives more ‘yes’ answers than ‘no’ answers, the scaling factor for a ‘yes’ answer that proves to be correct will be lower than the scaling factor that would be used for a ‘no’ answer if that had turned out to be correct.

The scaling factor to be used for each proposition is: the sum of all ‘yes’ and ‘no’ answers divided by the number of correct answers.

Those participants with correct answers for a proposition will be given 1 point multiplied by that proposition’s scale factor.  Incorrect answers will be given a score of zero points.  Any ‘unsure’ answers will not affect the scale factor and will be allocated one point for that proposition.

For example, if a proposition had 30 ‘yes’ answers and 20 ‘no’ answers, and the correct answer was ‘yes’, those that answered ‘yes’ would get a score of 1.67 and those that answered ‘no’ would get a score of zero points. If the correct answer was ‘no’, those that answered ‘no’ would get a score of 2.50 and those that answered ‘yes’ would get a score of zero points. Those that answered ‘unsure’ would get 1 point.

Each participant’s total score will be the sum of their scores for each of the 20 propositions. A ‘market index’ score will be 20 points. Can you beat the market? The winner of the competition will be the person with the highest total score. Fabulous prizes will be offered to the top three place-getters. There is nothing to lose, except for bragging rights!!

 When entries have closed the spread of answers for each proposition will be revealed in an Actuaries Digital article. Are you bullish, bearish or just not sure?

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The propositions that will be put to you in the survey are:

1. The AUD/USD rate will be below 75.0 cents as at 30 June 2018 [RBA series FXRUSD, source: WM/Reuters; 30 June 2017: 76.9 cents]
2. The iron ore price will be below US$50/t as at 30 June 2018 [Spot Iron Ore – China Import Fines 62% Fe per dry ton, source: Commsec; 30 June 2017: US$62.90/t]
3. The S&P ASX 200 price index will be above 6000 as at 30 June 2018 [source: Commsec market close; 30 June 2017: 5721]
4. The Australian 10-yr government bond yield will be above 2.75% as at 30 June 2018 [RBA series FCMYGBAG10D, source: YieldBroker; 30 June 2017: 2.60%]
5. The Australian inflation-linked government bond yield will be above 1.30% as at 30 June 2018 [RBA series FCMYGBAGID, source: YieldBroker; 30 June 2017: 1.10%]
6. The USD gold price will be above US$1400 as at 30 June 2018 [Spot US$ per fine ounce, source: Commsec; 30 June 2017: US$1241]
7. The S&P 500 index will be below 2400.0 as at 30 June 2018 [source: Google Finance, close of market; 30 June 2017: 2423]
8. The Japanese 10-yr bond yield will be above 0.20% as at 30 June 2018 [source: Bloomberg series GJGB10:IND; 30 June 2017: +0.086%]
9. The Federal Reserve target rate upper bound will be 1.75% or higher as at 30 June 2018 [source: Bloomberg series FDTR:IND; 30 June 2017: 1.25%]
10. The Greek 10-yr bond yield will be above 7.0% as at 30 June 2018 [source: Bloomberg series GGGB10YR:IND; 30 June 2017: 5.42%]
11. The Australian Bureau of Statistics (ABS) weighted average eight capital city residential property price index March quarter 2017 to March quarter 2018 will be negative [source: ABS 6416.0, March Qtr 2017: +10.2%]
12. NYMEX WTI crude oil price will be above U$55.00/bbl as at 30 June 2018 [source: Bloomberg series CL1:COM; 30 June 2017: US$46.04]
13. The China General Manufacturing PMI will be below 50.0 for May 2018 [source: Bloomberg series CPMINDX:IND; 31 May 2017: 51.2]
14. Melbourne weekend residential auction clearance rates for Autumn (March – May inclusive) 2018 will average under 70% [source: Domain/REIV; Autumn 2017: 79.9%]
15. The reported US unemployment rate for May 2018 will be above 4.7% [U-3 US Unemployment Rate Total in Labor Force Seasonally Adjusted, source: Bloomberg series USURTOT:IND; May 2017: 4.3%]
16. The investment return for the median balanced superannuation fund for the year to May 2018 will be lower than 5.00% (source: SuperRatings SR50 Balanced (60-76) Index, May 2017 +9.06%).
17. The S&P ASX 200 VIX will be trading above 18.0 as at 30 June 2018 [source: Google Finance, close of market; 30 June 2017: 13.4]
18. The RBA cash rate target will be 1.75% or higher as at 30 June 2018 [RBA series FIRMMCRTD, source: RBA; 31 May 2017: 1.50%]
19. The seasonally adjusted annual rate of Japanese real GDP for March quarter 2018 will be negative [source: Japanese Cabinet Office, Jan.-Mar. 2018 (The 2nd preliminary); March 2017: +1.0%]
20. In the 12-months to June 2018, including dividends and franking, the share price of Commonwealth Bank (CBA) will outperform the share price of BHP Billiton (BHP) [source: Google Finance, closing share prices on 30 June 2017 and 30 June 2018, including dividends in period, adjusted for franking, dividends not reinvested]

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