CapitalTime

Articles on investing and capital management, with a quantitative focus.

My Stock Picks Crashed!

2026-07-03

These are not stock recommendations. I don’t think picking individual stocks is worthwhile, as my own results demonstrate. Nearly all of my money is invested in my index-based portfolio and these experimental picks were a side project.

I’ve been experimenting with individual stocks to see if I can beat the index. After 8 years of promising results as seen in last year’s update, I was starting to think that I could beat the index. However, my “Active” stock-picking portfolio crashed in year 9, underperforming the benchmark by an astounding -57% over 12 months.

Clearly, I can’t beat the Canadian index by picking stocks!

This year’s crash is especially surprising for a couple reasons. First, I screened for low-beta stocks, which are generally more stable. Second, this was a very strong year for the TSX Composite Index, and yet 9 of my 10 stocks were negative!

Performance

I calculate my performance using two different start dates. There’s the True Start date (2016-12-28) when I began using this strategy, and also the Pessimistic Start date (2017-06-19) which begins slightly later. The Pessimistic Start skips over early outperformance and gives an unfavourable view.

My benchmark is XIC (the TSX Composite Index ETF).

The Active portfolio is dramatically underperforming the benchmark! There was a very sharp change in the last year, as illustrated below.

In my view, this pretty much kills the stock-picking experiment. Seeing such a bad result in a very strong year isn’t good.

I will stick with index investing.

— Jem Berkes