Gamifying Investing with Kapitall.com

Kapitall.comYears ago, I moved into my first Manhattan apartment. Before that, I was in Queens and I was THRILLED to make the move into the center of the action. I moved in with a buddy of mine. His old roommate was moving out.

This old roommate worked for UBS. I’m not sure exactly what his job function was, but I know he was involved with trading. When I moved in, we kept getting his mail. My buddy kept reaching out to him to get his mail to him. He wouldn’t have worried about it too much except for the fact that he kept getting official looking letters from the IRS.

About a year later, my buddy couldn’t take it any more and took a peak at one of these letters. This friend owed back taxes. He was making plenty of money and the back taxes weren’t that high, yet he didn’t deal with it. I was floored. This individual who was clearly deeply entrenched in the financial world was making a BONEHEAD financial decision by not dealing with this issue.

While this guy was trained and experienced with finance, he clearly didn’t prioritize PERSONAL finance. I think this is a perfect indication of the lack of personal finance education in our world today. So many people view personal finance as unimportant. We need to find a way to create interest in personal finance.

Part of that is demystifying the stock market. Kapitall.com is trying to do just that by gamifying investing. Just as I would play fantasy football, they have set up a platform to play “fantasy stock market”.

Needless to say, I am torn.

On one hand: what a great way to introduce people to the stock market and the forces that are at play in this part of our economy. It could spark an interest in the stock market and lead them down a road to learn even more!

On the other hand: you know by now that I am a believer in index investing. This type of gamification might lead to people engaging in a style of investing that I consider closer to gambling than anything else.

Either way, I had to check it out for myself, so I agreed to enter a tournament on their site. For one week, I was able to “invest” $100,000 in fake money – mostly in companies in the Dow 30, but with various “power boosts”, I could invest in S&P 500 companies. Believe me, I tried a few times to invest everything in VTSAX (Vanguard Total Stock Market Index Fund), but that was blocked for me. It was for the best as a 1-week time horizon is much too short for my beloved index fund to do good work anyway.

Results: 25th out of 37 participants

Yup – that seems about right. Confirmation that I should NOT be a stock picker. But it WAS interesting seeing the people at the top. The winner had a 70% return. WHAT??? It was a good week for the market, but that is seriously impressive for just one week in the market. At the end of the day, this “market guru” made a few bets that panned out. I actually would have loved to be able to see the portfolio of the winner after the contest was over – it would be great for the Kapitall team to implement that feature! But who knows what his portfolio would have looked like the following week, the following year, the following decade. We know that it is VERY rare that portfolio managers beat the stock market.

At the end of the day, I like what Kapitall.com is trying to do. And I get that long term investing is really difficult to gamify. But I’d love to see a feature on their site that promotes a long-term approach as well.

What do the readers think of Kapitall.com?

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4 thoughts on “Gamifying Investing with Kapitall.com

  1. The Jackal November 6, 2014 at 9:02 am

    Risky Mr. New York Budget. Wouldn’t want you getting in trouble with the law! (18 USC Section 1702)

  2. jlcollinsnh November 6, 2014 at 10:02 am

    Here’s how to win (hint: diversification is not your friend) such a one-week contest:

    –narrow the list of available investing options to those most volatile.
    –pick one and put all the money in it.
    –you might get lucky and it will have a big move up the week of your contest.
    –if it does, everybody will think you’re a stock picking genius.
    –if not, there’s always another contest. 🙂

    It is worth noting this is the very opposite of how to win in investing over the decades. 😉

    Oh, and VTSAX is never going to win such a contest. LOL
    jlcollinsnh recently posted: Jack Bogle and the Presidential Medal of FreedomMy Profile

  3. Mel November 14, 2014 at 6:47 pm

    Nice review. I was wondering how many of the other PF bloggers competing were a little hesitant about how much it really just turns into gambling at a week by week level.

    I also wish I had figured out those power boosts much sooner. They made a major different in how my portfolio did. 😛
    Mel recently posted: Inside the Artists Wallet: Episode 1My Profile

    • Mr NYBudget November 17, 2014 at 5:46 pm

      Great point – those power boosts were a game changer!

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