Quick Answer
In 1999, a chimpanzee named Raven ranked as America's 22nd most successful money manager by picking stocks with darts. This is fascinating because it highlights the sheer unpredictability of the stock market, suggesting that even expert analysis might be outperformed by random chance in certain conditions, questioning our understanding of financial success.
In a hurry? TL;DR
- 1In 1999, a chimpanzee named Raven achieved a 213% stock return by randomly picking companies via dart throws, outperforming most professionals.
- 2Raven's success highlights how irrational exuberance in the dot-com bubble made random picks outperform expert analysis.
- 3The experiment questioned the value of professional analysis in highly speculative markets, where momentum trumped fundamental value.
- 4This validated the 'Efficient Market Hypothesis' and the idea that short-term stock movements can be largely random.
- 5The study suggests that in certain markets, over-analysis by experts can be less effective than pure chance.
- 6Raven's dartboard strategy offers a colorful, real-time example of random portfolio selection potentially matching or beating skilled management.
Why It Matters
It's astonishing that a chimpanzee's dart-throwing stock picks could outperform 99% of human money managers during the dot-com boom.
In 1999, an actor-chimpanzee named Raven became the 22nd most successful money manager in the USA after picking stocks by throwing darts at a board. Her Monkeydex fund delivered a 213 per cent return, outperforming more than 6,000 professional Wall Street brokers.
The Raven Index by the Numbers
- Performance: 213 per cent annual return
- National Ranking: 22nd out of 6,115 professional money managers
- Selection Method: Darts thrown at a list of 133 internet companies
- Market Context: The height of the dot-com bubble
- Competitors Beaten: 99 per cent of all professional fund managers that year
The Dartboard Strategy
The experiment was the brainchild of David Allihan, a Hollywood veteran, and Roland Perry, a financial researcher. They wanted to test a provocative theory: in a market driven by irrational exuberance, professional analysis was no more effective than blind luck.
Raven, a six-year-old chimpanzee, was presented with a board featuring 133 internet-related companies. She threw ten darts. The companies she hit formed the basis of the Monkeydex. By the end of the year, her basket of stocks had surged in value, leaving seasoned analysts at firms like Goldman Sachs and Morgan Stanley in the dust.
Why the Professionals Lost
The late 1990s were an anomaly in financial history. Unlike other periods where value was determined by revenue and profit margins, the dot-com era rewarded volatility and pure momentum. Professional brokers often tried to find the logic in the chaos, whereas Raven’s darts simply landed on the most volatile tickers of the era.
Research published in the Journal of Portfolio Management has long debated the Efficient Market Hypothesis, which argues that stock prices reflect all available information. If the market is truly efficient, it is impossible to consistently beat it through skill. Raven provided the most colourful evidence for this theory, showing that a primate with no concept of a price-to-earnings ratio could theoretically retire on a yacht while experts struggled to break even.
Complexity is Not Capability
One reason Raven outperformed the humans was a lack of psychological baggage. Humans suffer from loss aversion, confirmation bias, and the tendency to follow the herd. Professionals often held onto losing stocks too long or sold winners too early because of complex emotional responses to market data.
In contrast to human traders who spent 80 hours a week reading charts, Raven spent her time eating fruit. Her success highlighted a uncomfortable truth: the more complex a system becomes, the more likely it is that simple randomness will outperform curated expertise.
Real-World Implications
Raven’s stint as a top-tier fund manager led to the creation of the Guinness World Record for the Most Successful Chimpanzee on Wall Street. However, the legacy of the experiment is more than just a trivia point. It helped popularise the shift toward index funds and passive investing.
If a chimpanzee can beat 99 per cent of active managers, investors questioned why they were paying high management fees for underperformance. Today, trillions of dollars are held in passive funds that essentially mimic Raven’s lack of bias, though with slightly more sophisticated algorithms than a dartboard.
Did Raven keep her job as a trader?
No, the Monkeydex was a one-year experimental index. Following her financial success, Raven returned to her career as an animal actor, appearing in various television roles.
Was the experiment scientifically peer-reviewed?
While the specific dart-throwing event was a promotional stunt, it replicated the findings of several academic studies. Similar experiments by the Wall Street Journal and various university researchers have consistently shown that random selections frequently match or beat professional picks.
Is it still possible for a monkey to beat the market today?
Yes. In 2012, a Brazilian monkey named Cinza outperformed the majority of human investors in a similar experiment. The principle remains: in a diversified market, random selection provides broad exposure that often beats the narrow, biased bets made by humans.
Key Takeaways
- Randomness: In a surging market, random chance is often indistinguishable from professional insight.
- Bias: Human investors are hindered by emotional biases that an animal or a dartboard does not possess.
- Indexing: The experiment bolstered the argument for passive index investing over active stock picking.
- Volatility: Raven’s success was largely due to the specific volatility of the 1999 tech bubble.
- Costs: The Monkeydex proved that expensive professional advice does not guarantee superior returns.
Professionalism is often just a very expensive way of disguising the fact that nobody really knows what happens next. Raven didn't need a Bloomberg terminal to see the future; she just needed a steady arm and a dart.
