Quick Answer
A chimpanzee named Raven was named one of America's top 22 money managers in 1999 by Guinness World Records. It's fascinating because her dart-throwing investment strategy outperformed many human professionals, proving just how unpredictable and even absurd the stock market can sometimes be.
In a hurry? TL;DR
- 1A chimpanzee named Raven became a top money manager by randomly selecting internet stocks, with a 213% return in 1999.
- 2Raven's success, achieving 22nd best in the US, supported the theory that random selection can rival expert financial management.
- 3The experiment highlighted the 'narrative fallacy,' showing how market bubbles can make random luck appear as expert skill.
- 4Most professional fund managers fail to consistently beat market benchmarks, as statistically demonstrated by the S&P Dow Jones Indices report.
- 5Raven's portfolio, heavily invested in tech, thrived during the dot-com boom but suffered during the subsequent crash.
- 6The event serves as a reminder that market performance can be influenced by chance, especially in trending or volatile conditions.
Why It Matters
It's surprising that a chimpanzee's random investment choices actually outperformed the vast majority of human financial experts.
In 1999, a six-year-old chimpanzee named Raven became the 22nd most successful money manager in the United States after her portfolio outperformed 6,000 professional Wall Street brokers.
Key Performance Indicators
- Ranking: 22nd most successful money manager in the USA (1999)
- Market Performance: 213 percent return on investment
- Comparison: Outperformed the S&P 500 and the NASDAQ
- Selection Method: Dart-throwing at a list of 133 internet companies
Why It Matters
A primate with zero knowledge of price-to-earnings ratios proved that in a bubble, blind luck mimics genius, exposing the fragility of professional financial forecasting.
The Monkey on Wall Street
The experiment began as a provocative stunt by Roland Perry and David Edwards, editors of the investment newsletter Monkeydex. They wanted to test a theory famously proposed by Princeton professor Burton Malkiel in his 1973 book, A Random Walk Down Wall Street. Malkiel argued that 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.
Raven lived up to the hypothesis with startling precision. To build her portfolio, she threw ten darts at a board containing 133 internet-based companies. By the end of 1999, her Monkeydex index had surged by 213 percent.
At the time, the average professional fund manager was struggling to keep pace with the frantic growth of the tech sector. Raven’s success was so statistically significant that Guinness World Records officially recognised her as the most successful chimpanzee in the financial world.
The Illusion of Skill
The Raven experiment provides a concrete example of what psychologists call the narrative fallacy. When a human fund manager sees a 200 percent return, we attribute it to vision, research, and instinct. When a chimpanzee achieves the same result, we are forced to admit the role of variance and market timing.
Raven’s portfolio was heavily weighted toward internet stocks during a period where nearly every tech ticker was moving vertically. While the professionals were busy over-analysing white papers, Raven’s random selection happened to catch the strongest updraft in market history.
The Aftermath and Market Correction
Like many stars of the late nineties, Raven’s financial career was short-lived. Following the dot-com crash in 2000, her portfolio suffered alongside the rest of the market. This decline further validated Malkiel’s theory: in a trending market, randomness looks like skill; in a volatile or bear market, the lack of a defensive strategy is revealed.
Despite the eventual crash, Raven’s 1999 performance remains a hall-of-fame moment for financial skeptics. It serves as a permanent rebuttal to the idea that high fees necessarily buy better performance than a dartboard.
Real-World Applications
- Low-Cost Indexing: Raven’s success is a primary argument for passive investing. If a chimpanzee can beat 6,000 brokers, paying high management fees for active trading becomes hard to justify.
- Luck vs. Skill: Use this case study to evaluate business success stories. It prompts the question: did they have a strategy, or were they just throwing darts in a bull market?
- Risk Awareness: The chimpanzee’s success reminds us that high returns often come from high-risk concentrations that cannot be sustained when market conditions shift.
Interesting Connections
- Financial Literacy: Learn how the S&P 500 operates as the ultimate benchmark for human and primate investors alike.
- Behavioral Economics: Explore the concept of survivorship bias—for every Raven who succeeded, thousands of other random selections likely failed and were forgotten.
- Animal Intelligence: Beyond finance, chimpanzees have outperformed humans in short-term memory tasks in various university studies.
Did Raven actually make money?
The trades were hypothetical, tracked through the Monkeydex index to compare against real-world funds. However, the performance was audited based on real market prices.
What happened to Raven?
After her brief stint as a financial icon, Raven retired from the spotlight. She spent her later years in a sanctuary, presumably disinterested in the fluctuations of the NASDAQ.
Has this ever been repeated?
Yes. In 2012, a cat named Orlando beat a team of professional investors by choosing stocks with his favourite toy. This suggests the Raven phenomenon was not a one-off fluke.
Why did she beat the professionals?
Professional managers often over-diversify or play it safe to protect their jobs. Raven’s random darts created a concentrated portfolio of high-growth tech stocks, which was the winning strategy in 1999.
Key Takeaways
- Randomness can outperform expertise in speculative markets.
- High management fees do not guarantee superior market returns.
- Passive index investing is often more reliable than active stock picking.
- Market timing and luck are frequently mistaken for financial genius.
