Meanwhile, All the Virtual Markets Are Thriving
Thomas Cleberg spends a lot of spare time thinking about which stocks he wants to buy these days. In the past few months, the college student has decided he might pursue a career on Wall Street, of all things.
Lately, it's looking as if he might have the chops for it. Earlier this month, his portfolio was up 160 percent, though at a recent glance, it's only up about half that now. Most of his holdings are down, but Wachovia is up 60 percent since he picked it up the other day at $3.84, and Cleberg is still riding high off a few other flips he made in recent weeks, such as when he picked up Fannie Mae and Freddie Mac at the bottom. As for Wachovia, this could be the second time he's made a minor killing off the bank's stock.
It's like Warren Buffett says: Be greedy when others are fearful.
The only thing is, Cleberg isn't betting any real-world money. He's one of the more skilled users of a Facebook application that lets players "invest" in a fantasy market designed to replicate the real thing.
On a good day, he's the No. 1 player in the United States, according to the charts at Fantasy Stock Exchange. But there's no telling where he'll be on that list tomorrow. And yes, it's probably a little easier to follow Buffett's investing maxim when there's nothing at stake but bragging rights.
At a time when investors are yanking billions of dollars out of the market, virtual stock market services say they're getting more attention from Web surfers than ever. It makes sense, sort of. If even hedge fund managers are moving billions of dollars into money-market accounts, this might be the only market you might want to be involved with right now.
Over the past year, the amount of traffic at Wall Street Survivor, another online stock market simulation service, has tripled.
"We've seen a huge spike in visitors," said Rory Olson, chief executive of Stock-Trak Group, the Montreal firm that runs the service. Olson ties his site's increased fortunes directly to the market's troubles. "People are frightened and looking for education and answers," he said.
Years ago, the company started out making programs aimed at the education market. If you ever took a college class about Wall Street or investing, the chances are decent you've used those products; about 1,000 schools and universities use Stock-Trak tools. A few years ago, the company figured that stocks had enough mainstream interest and it began to offer a free, ad-supported consumer version. The company now gives away cash prizes every month to the user who has the best-performing portfolio. Soon, the company plans to introduce another service, in which users would pay a fee to peek into the virtual portfolios of the site's regular top performers.
But education and answers only go so far in a market this bad. Olson admits that his personal portfolio of real-world investments got hurt just as badly as everyone else's in the last few weeks.
"I got really hammered," he said. "I was blown away by how vulnerable I am."
I worry a little bit about fans of these games. The sort of stock trading you have to do to make it to the top of one of these online diversions requires that you do pretty much the opposite of anything financial planners would ever advise.