Consumerist ACSI Fund 1st Check In

Does higher customer satisfaction lead to better stock performance?

After reading a scientific article in the Journal of Science claiming exactly that, we put together two mock stock portfolios. One contained companies that both scored in the top 20% of the American Customer Satisfaction Index (ACSI) relative to their competition and beat the national ACSI average. The other was the reverse, companies scoring in the bottom 20% and having scores lower than the national mean.

Since May, when the portfolios began, the ACSI fund is down 5.63%. The ANTI-ACSI fund is down 8.16%. Also, we messed up. Overview inside…

acsifund.jpg

antiacsi.jpg

It’s much too early to draw any sort of conclusion whatsoever but we thought you might be interested in seeing how they were doing so far.

We realized two things we did very wrong:
1) We’re a month behind in reporting the changes, somehow we miscalculated 4 months (we figured for four months in advance, rather than four months inclusive… doh!)

2) The ACSI index covers over 200 companies, but it only releases new scores for a limited number of industries each quarter. That is, different industries take turns getting reported each quarter and you don’t see the industries next set of scores until 12 months later. Therefore… we have a bunch of number crunching to do and have to evaluate and buy a crapload more companies, backdated to their May prices when the experiment began. Good thing we’re only playing with imaginary money!

PREVIOUSLY:
The Consumerist ACSI Fund v2.0
How To Beat The Stock Market: Buy Companies With High Customer Satisfaction Scores

Comments

Edit Your Comment

  1. krom says:

    Gosh, if I still worked for a stock data information company, I could probably crunch those numbers real easily. If only everyone could have Kobra and Effix on their desktops.

  2. JustAGuy2 says:

    Just curious, but are you really comparing apples to apples? You should have equal numbers of high and low scoring companies from _each sector_ in this analysis. For example, the anti-portfolio has a cable company, a wireline telco, and a wireless company, along with an airline, while the pro-portfolio has none of these. If, for example, stocks across the airline sector (good and bad ACSI scores) got whacked in the quarter (due, for example, to higher fuel prices), then that could skew the results.

  3. Notsewfast says:

    @JustAGuy2:

    There are all kinds of shortcomings here… I pointed out exactly what you said when they first put this thing together.

    The problem is that most of this is domestic, large cap stock and mostly companies from 2 or 3 industries.

    The data will likely be inconclusive because there is no way to prove correlation between customer service and stock prices and that any number of variables goes into determining these values.

    I think its all just a bit of a “what-if” type of thing aimed at determining if there is any added value in investing in high-scoring vs low scoring companies.

  4. Veeber says:

    One of my faculty members at RH Smith has been working on this. I’ll have to see if it’s the same paper.

    I have a feeling there is some impact, because companies that generally are performing well, probably have good procedures in place for customer service and training.