C (2:35)

If you liked gold and really thought about it, which I didn't enough cause I liked gold at the beginning, you would have probably would have picked silver. And that is why that contestant did that. He saw it as, you know what I mean by a high beta play, a more sensitive play on Gold.

B (2:54)

What kind of returns did you did they get?

C (2:56)

He was up I think 200 +% and he had one stock which is actually a FTSE 100 company, Fresneo, and it's known as a gold company. But actually if you look at it, it's 50, 50 gold silver and it was one of the top performers of all the picks. It was number two. It was up 300 plus percent.

A (3:20)

This gold silver thing is a good instance of a general rule in markets that if thing X has a great year, thing Y, which is a lot like X but is slightly crappier, will have an even better year.

B (3:40)

Well, they got that so right.

C (3:42)

I mean there has been, to be fair, at the end of the year there was a bit of a kind of, whether it was just a narrative or not, a bit of a short squeeze on silver. You know, there was talk of reducing imports into the United States. Yeah.

B (3:55)

So that kind of forced it higher.

C (3:57)

Yeah. So there is a number of sort of last quarter melt up, as you like to say.

A (4:02)

I would like to utter the L word at this point, which is luck.

C (4:09)

Yeah, well, no, there's always a lot of that. Well, how dare you?

B (4:13)

If it was you, Armstrong, like I've never experienced luck.

A (4:17)

I'm just a man who plays bad cards brilliantly. But in the case of everyone else, luck plays a huge role.

B (4:25)

I take my hat off to this person. But like what, what else worked for people, Alan? Were people just like all in on. On the AI trade or like what. What really worked out for people?

C (4:35)

There was, there was a fair bit on quantum computing. There was something called D Wave Quantum and that was a relatively popular pick. Whereas actually Fresnia, which I was just talking about, was up 379%. So that's nearly a five bagger. Think about that. And it's a big ish company. It is a FTSE 100 company. I think D Wave isn't nearly as big, it's not tiny. But there were a number of quantum computing stocks.

B (5:06)

Was there anything that people went into in large numbers that was just a disaster?

C (5:10)

There were people who tried to short Nvidia again.

B (5:13)

Right. They were betting against Nvidia. Brave.

C (5:17)

Yeah. That didn't work out. Shorting Alphabet was not a good idea. So people who shorted those kind of big companies, those on the other hand, that shorted things that I think you might have shorted last time, like strategy, which was Microstrategy before the crypto proxy, they did okay because that was down 50 plus percent, as was Trump Media. Whatever it's called.

B (5:40)

The Trump. Yeah, the special purpose tmt.

C (5:43)

Yeah, that was down a lot, but not that many people had it.

B (5:47)

So the reason I got absolutely carted out in last year's competition and Rob Armstrong called me on this very podcast a full sized idiot, was that I had bet against MicroStrategy, which is now called Strategy, which is one of these companies that does nothing other really than just buying Bitcoin. It's never made a huge amount of sense to me, but while I was short this company, so I was betting against it, the stock went up something like 400%. It became macro strategy and I got absolutely annihilated. But I wish I'd stuck with that this year because in 2025 that stock got pretty hosed and I would have been sitting quite pretty at this point.

A (6:29)

Can I just interject with one question here, guys?

B (6:31)

You can.

A (6:32)

Three of the top four performing stocks in the S&P 500 were from one industry. And I'm wondering if anybody picked these stocks. Computer memory had a bananas year because there was a structural deficit in the market. Plus you had some AI Frisson and so like Micron, Seagate and Western Digital all were up like 200%.

C (6:56)

They were, and they're absolutely right.

A (6:58)

So it was just an amazing year for those. Did anybody have those?

C (7:02)

They did have Micron. There were people who had much more, I would say traditional semiconductor stocks. Any, any semiconductor stock memory ones. Well, memory ones particularly. Yeah, yeah.

B (7:16)

Okay, it's time to name or shame ourselves and talk about how we, the good people of the ft, did, and those of us who were on this podcast did. And we will go in order of performance. Alan, gotta hand it to you, man, you absolutely killed it in 2025. Average returns of, get this listeners, 91%.

A (7:41)

Alan, what are you doing? As a journalist, why did you ever leave money?

C (7:45)

I don't know. I don't know, I don't know. This is just, you know, broken clocks and all that, I think once, once every 14, 15 years I've been here 12.

B (7:53)

Well, the funny thing about it is that as you say, you, you had two shorts, right? So you had two companies where you were betting on their stock price to decline.

C (8:01)

Yes.

B (8:02)

Now if you get a long bet wrong, so if you're betting on the share price is going to rise and you get that wrong, there's not that much that can really go wrong. The, the most you can possibly lose is 100%. If, however, you bet on something falling and it goes up, your downside is as I found out with strategy last year, unlimited and extremely painful. So you were very brave. You had two shorts, you had caring.

A (8:28)

There's another reason. Before we get to the shorts, there's another reason that shorting is hard. Most things go up most of the time. Do you know what I mean? Like the chart of the stock market over time works its way up and to the right. And you're betting against that when you.

B (8:45)

Go short, you know, line go up. But yeah. So you were betting against Kering, the luxury group and gam, the asset management group. And you still did incredibly well. Alan, please tell us your secret.

C (9:01)

The secret was owning to gold stocks. I picked junior, not tiny little explorers. Companies that had profits. So I wanted that leverage on the operating profits. So I got that with Oceana Gold and something else. So dpm.

B (9:18)

DPM Metals.

C (9:19)

Yeah. And I also picked a totally speculative stock, rocket lab, a SpaceX wannabe. It worked, right? Totally worked. I got my reasons totally wrong, but it worked.

B (9:33)

You should claim this as an act of pure genius.

A (9:36)

But the shorts, how did you pick those two short positions?

C (9:39)

So you may remember Rob, on the podcast you asked me, what is Gam Gam? I said was an investment house, but it is, it's a sort of fund management group. And I just thought the reputation had been badly damaged in previous scandals and that it would really struggle and, and I couldn't understand why it was still listed. But it did bounce for a while. Actually I was lucky cause it came down a little bit in the last couple of months.

B (10:05)

It was already down like 95% or something from the peak or something. So I'm very surprised that you picked.

C (10:10)

This one, but it was really a bad idea.

B (10:12)

Yeah, yeah, but Kering, what was your thinking there, Kering?

C (10:15)

I just thought that Pinot, who runs it, the sort of owner of it, was making mistake after mistake and Gucci wasn't firing well. And it's very important brand for, for caring.

A (10:28)

And you were, you were on the right side of a bad year for luxury generally. Right? I mean it was, it's been a tough year for luxury, mostly because of China. That's a long standing headwind. But it continued this year.

B (10:43)

So Alan, you can, you can take your place as the best performing FT journalist in this competition this year. Now overall in the ft, because there are some people who are not journalists in the building who also play along. But overall in the ft, I have restored my dignity, ladies and gentlemen. I was fourth within the FT and I came like 82nd out of a thousand and something people. Overall top decimal. So I am all in favor of this game, actually. Now I've decided.

A (11:16)

Tell us about the philosophy of your portfolio and did it work for the reasons you thought it was going to work?

B (11:22)

Yes, yes, I was very clever. I made like 67.4% pretty sweet. And I was just long all the way up and down of European defense companies. That's it. And they had an absolutely storming year. So I feel like for once.

A (11:42)

Yeah.

C (11:43)

Applause every year.

B (11:44)

Yeah. Because my thinking was if I did really, really badly again this year, I was gonna stop playing and just get in a mood. But now I'm all in.

A (11:53)

Here's the crucial question, Katie. I just wanna stick to this defense theme. Were those stocks already doing well when you started the contest in January? In other words, did you get on a trade that already had momentum?

B (12:08)

I did get on a trade that already had momentum. And there was a part of me that was thinking, like, Rheinmetall, for example, makes, like, defense stuff in Germany. It's just like, had an absolute Cracker Jack few years. I was thinking, oh, God, I kind of believe in the theme, but I do wonder if these things are getting a bit juiced here. But, no, they had a lot of gas left in the tank. And when I talk to investors about, you know, what are you doing with your portfolios for 2026, pretty much all of them that I speak to say, we like Europe an awful lot more than we have done in the past. And within Europe, we like green energy, we love banks. God, I wish I'd been long. Banks, European banks had a fantastic year and we love defense. And so, yeah, the defense trade did exceptionally well for me. So I'm feeling very pleased with myself.

A (12:57)

I think that's an instance of an old rule of stock picking, which is let your winners run. In other words, just because something's doing well doesn't mean it's going to stop doing well. On the contrary, it increases the chance that it will continue doing well.

C (13:12)

You know, as we know, this. This encourages you to let your winners run.

B (13:16)

Yeah, exactly. And there were. There was a period, like late in 2025, when some of the European defense stocks came off like they started falling because people thought, oh, there's going to be peace in Ukraine. Quite why people thought that was going to happen imminently, I'm not sure. And I was thinking, oh, no, not again. But it all came good. But so, Rob, I mean, you did pretty well. You were 23rd in within the FT crew with an average performance in your portfolio of 23%. This is good.

A (13:46)

Yes.

B (13:46)

Beats the index. It just doesn't beat me. Which I'm going to go on about.

A (13:50)

Yes, I'm sure we'll hear a lot more about that for the remainder of this show and perhaps in future shows. However, I mean, I play the game slightly differently. I only pick from the S&P 500 because those are the stocks I always write about. So I figure I might as well go into that pool. And in my own head, I'm just trying to beat the S and P. In earlier instances of this contest, I went for really high risk stuff and tried to kind of shoot the lights out. But now I try to actually build a portfolio of five stocks I could actually feel good about owning. So I'm kind of pleased that it was mission accomplished this year. But a couple of big winners. The biggest winner was Google. I went long Google for a couple of reasons. One, Aiden, my former protege here at the ft, was shorted and I wanted the chance to say nanny, nanny when he was wrong. So for the record, nanny, nanny, nanny. And two, the stock had a. Had the cheapest valuation of the Magnificent Seven. I saw the momentum in the Magnificent Seven. I want to, you know, I don't want, I want to be, I don't want to be left out of that for another year. So that turned out to be a good call. And I thought, if you remember a year ago, there was a lot of talk about Google and Apple. Google, I should say Alphabet. You know, Alphabet has this deal with Apple where they pay to be the default search engine on Apple. It's quite a lot of money. And I thought that was kind of win, win, like if they're no longer the default search engine, no one will switch and they won't have to pay the money anymore. It was a case in court whether they were allowed to do this. And if they win, people will think it's good news. We got a kind of muddled verdict that worked out fine. But the real thing was the thing that made Alphabet go bananas this year was the fact that at the beginning of the year people thought it was a laggard in AI. And by the end of the year, everyone thought it was a leader in AI. And, you know, that's what really made the thing go up.

B (16:06)

Yeah, you played that one nicely. But so when, when, when we all put our little picks into this competition, you had to put a reason along with each of them. You didn't have to, but you could put a reason along with each of them. And your theme for 2025 was boring.

A (16:21)

Yes.

B (16:21)

Boring wins in 2025, you said. I think you were wrong about the boring, but right about the portfolio.

A (16:27)

Well, let me say this. One of my boring picks did really well. I picked a company that people who are not on Wall street or in the health care industry won't have heard of it, but I picked McKesson, which is a big American company that distributes drugs. So they, like, get the pills to the drugstores, basically. You know what I mean? And it's this. And when you think about the number of drugstores and the amount of pills we take, this is quite a big job to do. And they're one of several large companies that do this. And it did very well because I think people did want a boring stock. Healthcare is the paradigmatically boring and steady industry. But most of healthcare was under political pressure from the president. So the pharma industry was under price pressure, political price pressure. The health insurance industry was under political pressure. So people who wanted a boring healthcare stock had very few options. McKesson was one of them, and the stock did well. So that version of boring did quite well. Thank you very much.

B (17:32)

Thinking of boring, you managed to pick a company so boring that it's called Waste Management.

A (17:42)

Waste Management takes trash away and disposes of it.

B (17:45)

So it's pills, trash, Internet. And then you had Vulcan Materials, which makes big.

A (17:50)

Literally makes big rocks into little rocks. It's an aggregates company.

B (17:55)

Rocks. And JP Morgan.

A (17:56)

And JP Morgan.

B (17:57)

So not bad, 23% out of your portfolio.

A (18:01)

I feel like it's a pretty low risk portfolio that did pretty well. So, you know, I'm quite pleased with myself, thank you very much.

B (18:08)

So Nick McGaugh, who sits next to me in the office, he's from the Lex column, he picked companies that all sounded a bit like his name anyway. That didn't go very well.

C (18:20)

No.

A (18:21)

What are those one bids?

C (18:23)

One was actually called Nick something in Australia.

B (18:26)

It was like Nike and like various other things. It sounded a bit like Nike had a tough year anyway, as a strategy, didn't go that well. But he did do better, I'm pleased to say, than Kadim Shubha, who did so spectacularly, brilliantly last year and who said he was going to retire from the game if he won it again in 2025. Well, ninky, ninky Nana Acadim, because you have bombed and so you're going to have to play it all over again.

A (18:53)

He won. If I. As I remember, he won the contest last year, just going all bitcoin all the time, right? Yeah, all crypto.

B (19:00)

So serves him right. If you're listening to this and you do pick stocks for a living, let us know your secret unhedged. FT.com Alan and Rob, we are going to have to come back in just one second with Long Short. Okie dokie. It is time for Long Short that part of the show where we go long a thing we love or short a thing we hate. Alan, like a good little soldier, you have prepared something, have you not?

C (19:29)

I am short the dollar. I think the dollar will keep going down. You know, the beginning of last year I thought that Mr. Trump would continue to throw rocks at the Fed. He has now raised the size of those rocks to boulders and he's rolling them down the hill as a Fed. So I don't see how that gets any better.

B (19:51)

Yeah, you could be right on that one. God, that's quite brainy, isn't it? Rob, what have you got?

A (19:55)

I have a serious one. I am long the people of Iran. I think this is a great civilization and a great country that has suffered under a terror what I think is a terrible regime for a long time. I don't know what's going to happen there, but Godspeed to you Iranians. We're with you civilized people everywhere wish you the best. So we got our fingers crossed in a terrible, terrible situation.

B (20:27)

So I am sure listeners may be aware I'm not a fan of prediction markets. I remain not a fan of prediction markets. I am short of them and I think we should stop pretending or acting like they are real markets. They are not. So these are markets where you can bet on anything. Is it going to rain tomorrow? What's this sports result going to be? Who's going to win this election or that election? And so news today from a bunch of our colleagues. Trading groups are expanding into prediction markets, hiring traders to arbitrage fleeting price discrepancies between contracts for events like football games and elections. Stop it. This is just, none of this is going to end well. People just betting on anything and everything and thinking that it's like a kind of almost like a regulated financial market. Honestly, knock it off. This is all going to end in tears. Lose your money betting on stocks instead, instead of betting on this sort of nonsense. That's what I say. Listeners, we hope this has been instructive to your investment plans for 2026. But please don't take us, take our word for anything. We will be back in your ears on Tuesday. So listen up then. Unhedged is produced by Jake Harper and edited by Brian Urstadt. Our executive producer is Jacob Goldstein. We had additional help from Topher Forges. Cheryl Brumley is the FT's global head of audio. Special thanks to Laura Clark, Alistair Mackey, Greta Cohn and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free. A 30 day free trial is available to everyone else. Just go to ft.com unhedgedoffer I'm Katie Martin. Thanks for listening.