Published: Friday, February 13, 2009
The winner of the $25,000 prize for top trader in the Financial Post Stock Market Challenge says he plans to host seminars for investors to show them his winning technique.
After the results were carefully audited by Stock-Trak Group, Doug O'Brien, a 66-year-old retired insurance sales manager from St-Hyacinthe, Que., who played as risingstar, finished the contest with $1,352,678.85 in play money, up 1,253% from the $100,000 that all contestants started with in mid-September. Mr. O'Brien was a full $539,766 ahead of the second-place trader and enjoyed a huge lead in a field of 35,337 registered participants.
The contest awarded a cash prize of $25,000 both to the top investor (fewer than 25 trades) and to the top trader (25 or more trades). Secondplace finishers in each category got $15,000, with $10,000 for third.
"I don't want to manage money," Mr. O'Brien said. "I just want to show them the basics of what I do so they can do it themselves. This is rather lucrative," he added, noting that he received about 150 e-mails from other players in the contest, many of whom wanted to know his secret.
"I've always enjoyed putting on presentations," he said, adding for those interested, he's at obriendoug@hotmail.com. His first public appearance will be in Montreal on March 11, at McGill University's Open Investment Forum.
In the contest, Mr. O'Brien kept his eye on five computer screens, displaying the game, together with feeds from Montreal-based DecisionPlus ( decisionplus.com)and StockWatch ( stockwatch.com).Each day would begin with a careful reading of the Financial Post, and online reading of FP columnist Don Vialoux's Tech Talk site ( dvtechtalk.com),Kitco ( kitco.com)for precious metals and Shark Investing ( sharkinvesting.com).Mr. O'Brien used the sources to help him make up lists of 15 to 25 stocks on the TSX, Nasdaq and NYSE that looked like they would have big moves that day. Since the contest rules did not allow players to short-sell Canadian stocks that traded below $3, Mr. O'Brien said he was forced to turn to the U. S. market, where he found an abundance of high-volume small-cap stocks that could be profitably sold short, he said, but their higher volatility meant he had to trade quickly.
He made nearly the contest limit of 5,000 trades, selling short when stocks were falling and buying when they were rising, then quickly getting out to record a small profit before the market turned against him.
Mr. O'Brien said he averaged a profit of $580 per trade or $14,500 per day, but warned that a $580 profit can disappear in a few seconds.
Not that he is finished. Mr. O'Brien said he intends to continue trading with his own account, just not as frequently. "It's not speculation, it's reality. Hearsay and tips will leave you poor," he said.
The technique brought him the first prize for traders: $25,000 in real money.
"I had no idea I was going to win, at first," Mr. O'Brien said. "I figured I'd be in the top quartile. After a month, I was first and I was looking at the competition and I thought, geez, I thought if I don't screw up or fall sick or take off on holidays, I should win this."
As the contest moved along and Mr. O'Brien's lead grew wider, he reduced his frequency of trading, keeping many of his planned strategies on the shelf. Near the end, as the second-and third-place traders began to make large gains, Mr. O'Brien adjusted his technique, he said.
"Not to brag, but if you beat them by too much, people will say, 'That's ridiculous, there's something wrong here. What trick does he have?' " he said. "Near the end, my girlfriend said I was getting a little too hyper, making too many trades, so I had to relax a little bit."
Mr. O'Brien said the first thing he intends to do with his winnings is to buy a Herman Miller chair, since his back gets sore while he sits at his desk, trading.
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