In the 1998-1999 contest, individual investor Lori West beat seven pros and her portfolio was up 54 percent. Yes, she was lucky, but so was John Thompson, the only professional stock picker who beat her. We ran the contest with a wild-card portfolio every year. One year it was all Memphis stocks, another year it was all dividend stocks, and for two years magazine staffers blindly picked stocks by poking a pencil through the newspaper. The wild-card portfolio never finished lower than the middle of the pack, and twice it finished in the top two or three.
Brokerage firms have a built-in bias that can hurt performance.
The bias is in favor of small-capitalization stocks in which the firm's investment bankers participate as underwriters. Or it can be companies that the research department likes even though the brokers don't like them, which happens a lot more than you might think. Or it can be companies with which brokerage firm executives have a personal relationship. The value a professional adds is discipline, asset allocation, and fee-based services such as estate planning. A good one is well worth the money.