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CNBC Million Dollar Portfolio Challenge - Tuesday, Week 3

[Scroll to the bottom for answers to today's Bonus Bucks trivia questions.]

Welcome to Week 3, the week with the most desired weekly prize - the Sony Style HD Home Entertainment Package.  This week's also notable in that it's the first full week of currency trading (assuming the system holds up - we're already getting at least one report of malfunction this morning). 

After suffering early technical troubles, currency trading went live again last Wednesday.  In the 6 days since, high-scorer Tara Arriola has managed to turn her $100,000 allotment into $140,000.  That's certainly impressive, but compared to the board-topping equity gains (more than $400,000 over 2 weeks), it appears that the currency portfolios will be less meaningful than one might've guessed (and than I did guess), despite the 10:1 leverage they offer and the fact that you can trade continuously throughout the day.

Even with those rules in place, there's apparently just not enough buying power and/or volatility even for superlative currency traders to make gains that compare to the superlative stock gainers.  The contest winners (and presumably each weekly winner) will continue to be home run hitters on the equity side.  That said, the rankings of the heaviest hitters can certainly be shuffled by currency returns.  To wit, James Fox has been usurped by Kevin Wheat atop the contest leaderboard.

With $9,000 in currency gains, Wheat hasn't scored nearly as well as Arriola, who's netted $40,000 so far.  But Fox hasn't done any currency trading.  So his stock lead over Wheat (totaling just $4,000) was easily wiped out by Wheat's currency gains.

Bottom line: currency trading matters.  But even if you do quite well, the small initial allocation means that (notwithstanding the leverage and continuous trading), its ability to contribute to your overall performance is still significantly less than that of the stock portfolio.  If reallocating most of your currency trading energies to equity trading enables you make even slightly better stock picks, it's almost certainly the way to go.

To that end, here's your crop of eligible stocks that will report earnings tonight or tomorrow morning.  Of these 13, you may want to take a closer look at the last 3, if you're looking for stocks that have the capacity to gap up tomorrow (based on the amount of analyst coverage, the difference between the high and consensus analyst estimates, recent revisions to those estimates, today's price move, the stock's historical volatility, and the company's earnings surprise track record).

Company	Symbol
RBC Bearings	ROLL
Cogent, Inc.	COGT
Shanda Interactive Entertainment	SNDA
China Nepstar Chain Drugstore	NPD
Dollar Tree Stores	DLTR
American Eagle Outfitters	AEO
Donaldson	DCI
Polo Ralph Lauren	RL
National Bank of Greece	NBG
Toronto Dominion Bank	TD
WuXi PharmaTech	WX
Chico's FAS	CHS
Daktronics	DAKT

(Consider all of the above to be for entertainment purposes and not meant to be used as real-world investment recommendations.  The goals and strategies of the Portfolio Challenge are not to be confused with those of sensible investing.) 

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See all related posts in the CNBC Portfolio Challenge archive:

• Week 2: Friday
• Week 2: Thursday
• A New Fly In the Ointment
• Week 2: Wednesday
• Currency Trading Resumes
• Week 2: Tuesday
• Week 2: Monday
• More Technical Difficulties
• Prize Poll
• Week 1: Friday
• Week 1: Thursday
• The Airing Of Grievances
• Week 1: Wednesday
• Week 1: Tuesday
• Technical Difficulties, Orders Cancelled
• Week 1: Monday
• Week 0

To receive additional updates by e-mail, drop a line here with the word "Subscribe" in the subject header.  (We promise you won't receive a "disgusting" e-mail reply.)

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Tuesday May 27th

Throughout the contest, each day's answers will be at the top of the CNBC Portfolio Challenge archive as soon as the questions are published, so bookmark accordingly.

Daily Trivia:

Squawk Box:  "Realty Check: Who sparked Countrywide CEO Mozilo's "disgusting" e-mail reply?"

  Answer:  Daniel Bailey Jr.

Squawk On the Street:  "The other black gold: On May 22, super-trader Jon Najarian said coal is up more than oil. He recommended buying:"

  Answer:  Consol Energy

The Call:  "In his June investment outlook, Pimco's Bill Gross warned that U.S. inflation statistics were:"

  Answer:  "Not reflecting reality"

Power Lunch:  "In "$135: The Biggest Loser" the Fast Money team warned of companies hurt by oil prices. Which stock did they PAN?"

  Answer:  PetroChina

Street Signs:  "On May 9, Jim Cramer assailed AIG -- and its CEO Martin Sullivan. What did the Mad Money guru call the company?"

  Answer:  Moronic 

Closing Bell:  "Web Extra: On May 23, what natural-gas equipment stock did Shawn Reynolds exclusively pick for CNBC.com readers?"

  Answer:  Exterran

Weekly Bonus Quiz:

Question:  "An investor’s _______ size is the dollar value being invested into a particular security."

Answer:  Position

I hope everyone got this one right, because it's verbatim the same question from last week.  Let me know if anyone gets a different question.

Also, please let me know if you have any idea what these guys are all about.  They confuse me.  It's like some strange, finance-themed mime routine.

Comments

CNBC Million Dollar Portfolio Challenge - Tuesday, Week 3

[Scroll to the bottom for answers to today's Bonus Bucks trivia questions.]

Welcome to Week 3, the week with the most desired weekly prize - the Sony Style HD Home Entertainment Package.  This week's also notable in that it's the first full week of currency trading (assuming the system holds up - we're already getting at least one report of malfunction this morning). 

After suffering early technical troubles, currency trading went live again last Wednesday.  In the 6 days since, high-scorer Tara Arriola has managed to turn her $100,000 allotment into $140,000.  That's certainly impressive, but compared to the board-topping equity gains (more than $400,000 over 2 weeks), it appears that the currency portfolios will be less meaningful than one might've guessed (and than I did guess), despite the 10:1 leverage they offer and the fact that you can trade continuously throughout the day.

Even with those rules in place, there's apparently just not enough buying power and/or volatility even for superlative currency traders to make gains that compare to the superlative stock gainers.  The contest winners (and presumably each weekly winner) will continue to be home run hitters on the equity side.  That said, the rankings of the heaviest hitters can certainly be shuffled by currency returns.  To wit, James Fox has been usurped by Kevin Wheat atop the contest leaderboard.

With $9,000 in currency gains, Wheat hasn't scored nearly as well as Arriola, who's netted $40,000 so far.  But Fox hasn't done any currency trading.  So his stock lead over Wheat (totaling just $4,000) was easily wiped out by Wheat's currency gains.

Bottom line: currency trading matters.  But even if you do quite well, the small initial allocation means that (notwithstanding the leverage and continuous trading), its ability to contribute to your overall performance is still significantly less than that of the stock portfolio.  If reallocating most of your currency trading energies to equity trading enables you make even slightly better stock picks, it's almost certainly the way to go.

To that end, here's your crop of eligible stocks that will report earnings tonight or tomorrow morning.  Of these 13, you may want to take a closer look at the last 3, if you're looking for stocks that have the capacity to gap up tomorrow (based on the amount of analyst coverage, the difference between the high and consensus analyst estimates, recent revisions to those estimates, today's price move, the stock's historical volatility, and the company's earnings surprise track record).

Company	Symbol
RBC Bearings	ROLL
Cogent, Inc.	COGT
Shanda Interactive Entertainment	SNDA
China Nepstar Chain Drugstore	NPD
Dollar Tree Stores	DLTR
American Eagle Outfitters	AEO
Donaldson	DCI
Polo Ralph Lauren	RL
National Bank of Greece	NBG
Toronto Dominion Bank	TD
WuXi PharmaTech	WX
Chico's FAS	CHS
Daktronics	DAKT

(Consider all of the above to be for entertainment purposes and not meant to be used as real-world investment recommendations.  The goals and strategies of the Portfolio Challenge are not to be confused with those of sensible investing.) 

---

See all related posts in the CNBC Portfolio Challenge archive:

• Week 2: Friday
• Week 2: Thursday
• A New Fly In the Ointment
• Week 2: Wednesday
• Currency Trading Resumes
• Week 2: Tuesday
• Week 2: Monday
• More Technical Difficulties
• Prize Poll
• Week 1: Friday
• Week 1: Thursday
• The Airing Of Grievances
• Week 1: Wednesday
• Week 1: Tuesday
• Technical Difficulties, Orders Cancelled
• Week 1: Monday
• Week 0

To receive additional updates by e-mail, drop a line here with the word "Subscribe" in the subject header.  (We promise you won't receive a "disgusting" e-mail reply.)

---

Tuesday May 27th

Throughout the contest, each day's answers will be at the top of the CNBC Portfolio Challenge archive as soon as the questions are published, so bookmark accordingly.

Daily Trivia:

Squawk Box:  "Realty Check: Who sparked Countrywide CEO Mozilo's "disgusting" e-mail reply?"

  Answer:  Daniel Bailey Jr.

Squawk On the Street:  "The other black gold: On May 22, super-trader Jon Najarian said coal is up more than oil. He recommended buying:"

  Answer:  Consol Energy

The Call:  "In his June investment outlook, Pimco's Bill Gross warned that U.S. inflation statistics were:"

  Answer:  "Not reflecting reality"

Power Lunch:  "In "$135: The Biggest Loser" the Fast Money team warned of companies hurt by oil prices. Which stock did they PAN?"

  Answer:  PetroChina

Street Signs:  "On May 9, Jim Cramer assailed AIG -- and its CEO Martin Sullivan. What did the Mad Money guru call the company?"

  Answer:  Moronic 

Closing Bell:  "Web Extra: On May 23, what natural-gas equipment stock did Shawn Reynolds exclusively pick for CNBC.com readers?"

  Answer:  Exterran

Weekly Bonus Quiz:

Question:  "An investor’s _______ size is the dollar value being invested into a particular security."

Answer:  Position

I hope everyone got this one right, because it's verbatim the same question from last week.  Let me know if anyone gets a different question.

Also, please let me know if you have any idea what these guys are all about.  They confuse me.  It's like some strange, finance-themed mime routine.