The Wall Street Journal recently reported on a very ambitious, and very idealistic pursuit; trust the internet with proposing and voting for stocks to fill a 26-year-old’s US $50k portfolio.
The Wall Street Journal, much to our amusement, affectionately referred to these 400,000 strangers on the internet as, “yahoos”. It’s a fair comment and while we are certainly in favor of the use of a voting portfolio (naturally), the internet tends to reward the odd and the extreme.
Letting the Internet Take Control
The venture began Tuesday morning when Mike Roberts, the young Amazon (AMZN) engineer from Seattle “handed over a personal $50,000 brokerage account to a most unusual group of money managers.”
The premise of allowing the internet to handle his hard-earned savings seems to have been game theory; “the study of human conflict and cooperation within a competitive situation,” according to Investopedia.
Making a Game of the Stock Market
“People say the stock market is just a game,” says the Wall Street Journal, “and in the case of Mr. Roberts and his … cash, it really is. By setting up an algorithm using thousands of lines of computer code, the risk-embracing Amazon.com Inc. employee is allowing anyone to vote on what stock to buy or sell with his money. Based on their votes, the game is designed to make a move every five minutes.
We understand this desire; voting on stock trades is at the very heart of Voleo, though the intentions differ significantly.
Similar in Theory, but Different in Practice
Clearly there are obvious differences between Mr. Roberts’ creation, named StockStream, and Voleo, namely that with Voleo it is not a single person offering up their cash for portfolio allocation, but a group of people, whether friends, family, or colleagues, who pool their money to create a larger fund. Additionally, it is these people, not complete internet strangers, who have the authority to propose and vote on stocks.
By virtue of the model, everyone in the investment club has their own best interest in mind. This reduces the propensity to make wacky trades, and eliminates the fear of the group shirking portfolio diversity.
Voting further enables each Voleo user to build a personal score based on the definitive return on investment decisions (a DROID score), which feeds a broader community of investors who can be followed in real time. Thus you get the power of the ideas from the community, but are always validating those with people you trust.
When Trolls Get Involved
According to the Wall Street Journal, “online trolls got to work swiftly Tuesday, electing over and over again to buy shares of Seaboard Corp. (SEB), the second-most expensive US-listed stock. His $50,000 would buy just 12 full shares in the agribusiness and transportation company.”
“‘This is exactly the sort of disaster I was hoping would not happen,’ [Roberts] recalls thinking.”
Luckily, “as Tuesday rolled on, a crowd of anti-Seaboard players entered the fray, voting to sell down the stock,” and “discussed other stocks and began mapping out strategies for diversification.”
Investment Clubs Made Fun
The article also noted that “for years, people have used online tools to simulate stock portfolios,” but that “none seem to have backed up their bets with hard currency.”
Here, we’re very pleased to note that in addition to our stock simulator experience, Voleo SimuTrader, we certainly do allow investors to back up their proposed trades with hard currency in a gamified in-app experience.
Along with proposing stocks to your club members, you also get to tell them you told them so when your picks perform, regardless of whether or not the club voted to make those trades, thanks to our aforementioned DROID score.
And should you be curious, Mr. Roberts funded his $50k brokerage account with “sales of bitcoin and vested shares of Amazon he had received as compensation.”
Ready to start investing with the wisdom of the internet plus your trusted peers? US residents can get the android app here and iPhone app here.
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