Can Animals Beat Wall Street? The Surprising Truth About Randomness in Monkey Trading

When major sporting events arrive, unexpected predictors emerge – not just analysts, but animals. The 2010 World Cup saw Paul the Octopus correctly forecast eight matches, sparking a curious phenomenon: if animals can predict sports, why not stocks? This playful question led to a deeper investigation into whether random selection could outperform professional investment expertise, revealing uncomfortable truths about market efficiency and luck in trading.

Orlando the Cat: When Felines Outperform Analysts

In 2013, the London Observer conducted an unconventional experiment. They pitted Orlando, a cat, against professional stock pickers and university students in a structured competition. Each participant received 5,000 pounds to invest in five FTSE-listed companies, with the flexibility to trade quarterly.

The methodology couldn’t have been more different. Professionals deployed decades of accumulated knowledge and sophisticated analytical frameworks. Orlando, meanwhile, selected stocks by tossing his favorite toy mouse onto a grid of numbered squares, each representing a different company.

The results challenged conventional wisdom: Orlando achieved a 4.2% return, accumulating approximately 5,500 pounds by year-end. The professional investors? They managed around 5,200 pounds – beaten by a feline’s random selection.

Monkey Trading: The Empirical Foundation

The concept of animals making sound investment decisions isn’t new. It traces back to Burton Malkiel’s 1973 seminal work, A Random Walk Down Wall Street. Malkiel proposed a provocative hypothesis: “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.”

This theory suggested that beating the market consistently is extraordinarily difficult, and the average professional fails to achieve it regularly.

The Raven Case Study (1999)

History provided a remarkable test case. In 1999, a chimpanzee named Raven – familiar to audiences from Babe: Pig in the City – participated in an internet stock selection experiment. She threw ten darts at a board displaying 133 internet-related companies.

The outcome was staggering: Raven outperformed more than 6,000 professional technology and internet fund managers, delivering a 213% return. MarketWatch.com declared her the year’s victor with the headline “Chimp '99 champ! Makes monkey of Wall Street.” Her performance was so impressive that financial analysts created the “Monkeydex” – an index tracking her selections.

However, the dot-com bust of 2000 exposed the fragility of her strategy. When markets contracted, Raven’s portfolio deteriorated sharply. One finance professional’s observation became prescient: “Any monkey with a dart can potentially make money in a rising market.”

Other Notable Animal Investors

Russia witnessed its own monkey trading phenomenon through Lusha, a circus chimpanzee whose portfolio outperformed 94% of Russia’s mutual funds.

Perhaps most consistently, Adam Monk – a Brazilian cinnamon ringtail cebus monkey working for the Chicago Sun-Times – demonstrated longevity in monkey trading. Using a red pen to circle stocks in newspapers, Adam Monk outperformed market indexes for four consecutive years from 2003 to 2006. In 2008, when most money managers suffered losses exceeding 35%, his portfolio declined only 14%.

Understanding the Paradox: Why Do Random Selections Succeed?

Research Affiliates conducted simulations confirming that random stock selection frequently beats market indices. Their analysis identified a critical factor: randomness statistically favors smaller companies, which historically outperform larger firms.

This phenomenon reveals an uncomfortable market reality: short-term investment performance contains substantial luck components. Whether selecting through darts, a cat’s toy mouse, or traditional analysis, chance plays an outsized role in outcomes measured over months or years.

Tom Gardner, founder of The Motley Fool, provided crucial perspective: meaningful investment assessment requires extended timeframes. One year of data, whether from Orlando or a seasoned professional, reveals minimal truth. Comparing a cat to Warren Berkshire’s Charlie Munger over a decade would conclusively separate skill from fortune.

The Verdict on Monkey Trading and Market Efficiency

The evidence supporting monkey trading as a viable strategy underscores Malkiel’s central thesis: professional investors struggle to consistently beat the market. Animal selection experiments demonstrate that randomness, particularly when accidentally favoring smaller equities, can generate returns matching or exceeding professional management.

Yet this insight shouldn’t discourage individual stock research. Rather, it emphasizes that market-beating performance over short intervals often reflects luck rather than expertise. Meaningful conclusions about investing skill – whether in humans or primates – only emerge from extended observation periods, where systematic decision-making can separate from random fortune.