If our index can beat the professionals on a risk adjusted basis, this will provide further evidence of the 'wisdom of crowds'
London, UK (PRWEB) February 12, 2009
Stockopedia (http://www.stockopedia.co.uk), the UK's first social network for private investors, today announces the forthcoming launch of the 2009 Stockopedia Challenge to try to find the best private investor in the UK. The competition is open to all applicants and goes live on March 31st 2009 until December 31st 2009. The winner will receive free flights for two from London to Wall Street, with significant runner up prizes.
Edward Croft, Managing Director of Stockopedia, said "We are looking to find the best private investor in the UK. The idea is to allow both amateur and experienced stock pickers to compete against each other and compare their performance. We are looking for people who are prepared to challenge conventional wisdom, the mavericks who will take a position on companies that the stockbroking industry doesn't cover at all or covers with thin, uninformative analysis. It won't be easy to win the challenge. Making money in a bull market can be easy but making money in today's environment is a whole different ball game".
Stockopedia offers a sophisticated Investment Simulator, offering its users the opportunity to gain practical experience trading stocks under real market conditions, using actual prices. Edward Croft added "Our trading platform provides a realistic and fun interface for users to simulate trading. This will give investors in the UK stock market the chance to test out their investment ideas in a risk-free environment. Stockopedia covers almost 3,000 listed equities in the UK market across 124 different sub-sectors creating the scope to follow any investment strategy - whether it involve a growth, value, blend or quantitative/screening investment style".
Using its proprietary virtual trading platform, members of Stockopedia are able to manage their own fantasy fund in order to participate in the Stockopedia Challenge. Each fund starts with one million 'Stockopedia Pounds'. Performance is then tracked in real time, complete with a chart of user performance against the index. Over time, funds are compared based on the cumulative change in net asset value (NAV). The Stockopedia Leaderboard (http://www.stockopedia.co.uk/fund) tracks the best performers. The winner will be judged based on the greatest percentage increase in NAV from on March 31st to December 31st.
The rules of the competition are:
1. Each fund must be more than 60% invested in equity - just holding cash in a bear market doesn't say much about stock picking abilities
2. The fund must avoid excessive concentration - the largest single equity holding in a fund must be less than 25%.
3. No single equity position can be purchased when >15% of the fund size.
4. All shares listed on the London Stock Exchange or the Alternative Investment Market are eligible but no fund may own more than 3% of a company's market capitalisation. This is to discourage oversized speculation in illiquid securities.
5. Fund managers must have a minimum of 5 stocks and a maximum of 50 stocks in your portfolio. Beware frictional trading costs, as each trade costs 15 basis points' worth of 'Stockopedia Pounds'.
"The great thing about trading on Stockopedia is that you can back stocks that in reality you might not risk investing in, and you can test out a higher or lower risk investment strategy to see how it fares. The trading platform also links into Stockopedia's social bulletin boards where I can pick up interesting ideas and where others can see how I am getting on. Some of the best ideas come from picking up half a thought from someone and piecing it together with something else I've read. The Stockopedia platform stimulates such stock ideas and then allows you to research them," said private investor and finance professional, Dominic Williams.
The best funds in the 2009 Challenge will compete for entry to the forthcoming Stockopedia Virtual Index, an aggregate of the top 100 portfolios on Stockopedia, which is intended to be launched in January 2010. Social stockpicking is a more established idea in the US, with sites like Motley Fool's CAPS and Stockpickr, but Stockopedia is one of the first to try to apply this theory to the UK market. "If our index can beat the professionals on a risk adjusted basis, this will provide further evidence of the 'wisdom of crowds'", continued Edward Croft. "It remains to be seen but I personally believe that there's a chance of this. Efficient market theory has been shown to break down amongst smaller companies, but institutions may be too large to take advantage of these pricing anomalies". Stockopedia hopes to show that, by aggregating the best private investors, its community's collective decision making can generate "alpha" and, by doing so, create a fountain of potential investment ideas for its members.
To join in the Challenge, you can sign up for free at http://www.stockopedia.co.uk/fund/challenge before March 31st 2009.