In May of this year, I did something that no investor ever would.

I put myself out there.

I described, in detail, “the Neckbeard Index 2.0”, a portfolio of stocks inspired by stereotypical Reddit neckbeards. These stocks include:

• NVIDIA and AMD because neckbeards are stereotypically gamers
• Domino’s Pizza because these folks are overweight
• Amazon because they are far too lazy to pick up their own groceries
• Logitech because they sell the equipment gamers need for their PCs
• Microsoft because they own half of the software engineering stack (such as GitHub and VSCode), they own Xbox, and they own 49% of OpenAI
• Robinhood because that is Reddit’s favorite brokerage by far
• Take-Two Interactive Software, because they own the GTA franchise
• Gamestop because its popularity originated on Reddit
• Obviously Reddit

This list of stocks is not only beating the market…

It is absolutely destroying it.

What is the Neckbeard Index 2.0?

The Neckbeard Index 2.0 is a satirical portfolio inspired by a Reddit comment from 6 years ago.

In this comment, the original user describes how stocks like NVIDIA, Tesla, AMD, and Bitcoin could outperform a fictitious “White Girl Index”.

In my original article, I described how I was shocked that this basket of stocks significantly outperformed the broader market.

Keep in mind, this portfolio wasn’t just better than the market — it dominated. In the past 6 years, it has earned a 700% gain, compared to the broader market’s gain of 95%. That alone was shocking.

So, as a fun experiment, and a way to showcase the effects of relying on broader market themes to guide your investing decisions, I announced “the Neckbeard Index 2.0”.

This portfolio contains more updated stocks that aligns with the Reddit neckbeard archetype. This includes decisions such as:

• Removing Bitcoin and Tesla due to sentiment shifts across the platform
• Adding GameStop and Reddit for obvious reasons
• Keeping most of the other stocks the same

I added these portfolios to my free algorithmic trading platform NexusTrade. NexusTrade is an automated investing platform designed to help retail investors make better financial decisions.

Adding GME and RDDT stocks turned out to be great decisions. However, removing Bitcoin and Tesla turned out to be poor ones. Hindsight is 20/20, and if I could go back in time, I would’ve removed Domino’s Pizza and Logitech.

However, despite this, the updated Neckbeard Index 2.0 is performing astonishingly well, with returns leaving the S&P 500 in the dust – a feat only accomplished by less than 10% of hedge fund managers.

How did this portfolio do?

On May 16th, 2024, I deployed this portfolio for real-time paper-trading. For simplicity, I chose extremely simple rules: Buy and Hold.

In addition, I added this strategy (and the original Neckbeard Index) to the algorithmic trading library on NexusTrade.

Since launching this portfolio to the public, it has gained a whopping 24.2% in the past 6 months.

In contrast, the broader market has gained half of that, at only 12.9%.

These results suggest that the Neckbeard Index is much more profitable than the broader market. Let’s look at some of the stocks in this portfolio.

Biggest Winners: Reddit leading the pack

In an ironic twist of fate, the most profitable stock in this entire portfolio is Reddit, at an astounding 100% gain in the past few months.

This is ironic because Reddit’s IPO was highly controversial, with many users thinking the stock would go directly to $0 shortly after. Reddit did something that was almost unheard of for an IPO; they offered shares to their users.

The prevailing wisdom was that this was a sign that the IPO would be a complete and utter failure. Obviously, this proved to be false, as Reddit was able to capitalize on the AI revolution by selling vast quanties of data to companies like Google.

This allowed them to become profitable and destroy analysts expectations

Other notable performers includes Robinhood and NVIDIA, earning 64% and 58% respectively.

In contrast to the winners, which have either had huge rallies earlier this year (such as NVIDIA) or were controversial investments, some of the losers are even more surprising.

AMD, Logitech, and Microsoft Lead the Losers

Fundamentally strong technology stocks like AMD and Logitech are some of the portfolio’s biggest losers, losing around 13% each in the past few months.

Other stocks like Dominos’s Pizza (whose performance mirrored Google for decades) and Microsoft were also disappointing, with percent gains that underperformed compared to the broader market.

While counter-intuitive, I’m actually not surprised. In my previous articles, I described how I performed fundamental analysis on large groups of stocks, and concluded that past earnings metrics has little correlation to future stock performance for most US stocks, especially for stocks with a market cap below $200 billion.

These results provide further evidence that a stock’s fundamental past earnings are just one part of a story, and that other factors, such as broader market themes, investor sentiment, and outperforming the consensus expectations may play a much larger role in predicting future stock price.

What can you learn from this?

The purpose of this article is not to convince you to purchase highly speculative, volatile assets, and re-assuring you that you’re guaranteed to make a profit.

The main purpose is to show how recognizing broader market themes can lead to a sustainable edge.

This article showcases it twice – with the original Neckbeard Index and the newer Neckbeard Index 2.0. These portfolios were highly speculative investments that took advantage of the rise of gaming, artificial intelligence, and retail investing.

This article also shows that “fundamentals” aren’t a secret weapon. In fact, in the short-term, some of the best stocks fundamentally in this portfolio performed the worse, including FANNG stocks like Amazon and Microsoft.

Creating a profitable investing strategy to outperform the market is incredibly difficult, but there are many avenues to doing so. Recognizing market trends and doing outside-the-box thinking are a recipe for creating a portfolio better than all of your friends.

If your goal is to become a better trader and investor, NexusTrade is a free platform designed specifically for you to make better financial decisions. It has helped over 10,000 traders and investors with their investing with its suite of AI tools.

You can use it to backtest strategies, find new stocks, and analyze your watchlist. There’s not a better free platform available. Who knows, maybe you can create your own index... One based on data, facts, and broader market trends.