True to their motto, Sweet Briar College selected The Naked Portfolio Manager: Why Rules Trump Reason on Wall Street for their "Principles of Investments Class" because of its iconoclastic view on investing. The Naked Portfolio Manager says if an intelligent person uses a clearly defined set of guidelines, he or she can create a portfolio that performs just as well as those of the smartest guys in the investment world. The class intends to test the theory next year by contrasting the models they developed against those of the top minds on Wall Street. It's an investment "bake off," if you will. The young ladies will present their final models in the next couple of weeks.

                                       

                             

Professor Tom Scott, pictured with me above, will post the students' rules and track the performance of these models on the Internet for the year 2010; you can also follow their progress on this blog. I'm betting Sweet Briar will prevail!

To be fair to Wall Street, the ladies had the benefit of reviewing a large number of empirical models that had been developed by experienced portfolio managers before creating their rules. But that's just the point of The Naked Portfolio Manager; if a method is effective regardless of who created it, you can and should use it. I can't say it enough; by applying a set of clearly defined, empirically-based rules in a rigid, disciplined manner, you can avoid all the emotional mistakes that individual and professional investors make, thus giving you the edge.