Tracking Stock-Picking Prowess Online
This summer's obsession with the number 755—thanks to Barry Bonds's successful assault on Hank Aaron's long-standing home-run record—makes it hard to believe that it took baseball more than 50 years to publish a book of player statistics. It's even harder to believe that the numbers-driven investment community has taken longer than that to start charting its own players.
That may soon change with a flurry of new services letting casual investors track individual stock pickers' fake and real portfolios online, opening them up to scrutiny. For now, those individual surveys remain voluntary and dominated by nonprofessionals.
Sites like Bullpoo.com and Icarra.com follow in the footsteps of Marketocracy, which comanager Ken Kam developed in 1999 to help him solve a hiring crunch at his own highflying $8 billion Fairhand Value Tech Fund. "I was watching a baseball game, and my friend pointed out there were scouts in the stands," Kam says. "If you want to hire a pitcher, you watch the guy pitch and assess his skill. You don't ask for his college résumé and transcripts." The problem with the investment industry was that while mutual funds themselves had track records, there were no statistics for individual managers, he says.
When others at Firsthand didn't get on board with the idea of testing out potential hires using the website, Kam left, along with the fund's comanager, Mark Taguchi, to start Marketocracy. The site allows any user to "invest" $1 million in play money for free. The pair originally thought it would take about five years before they would have enough data to figure out who made the best stock picks.
But less than 18 months after the site launched in June 2000, they had already begun to notice a pattern. There were about 100 or so members whose picks consistently performed well month to month. And those members weren't just Wall Street investors or industry players but included investing junkies who make a hobby of the stock market.
Professional money managers won't get their own Cooperstown anytime soon, but in the meantime, money-manager wannabes have several places to assess their own skills. Bullpoo.com also gives users $1 million in play money to invest. If you do badly, you won't lose money, but you will lose face with other Bullpoo members, who can see your portfolio. Icarra lets you track your own real-money investments and then offers you stock picks based on your portfolio. You don't have to share your portfolio with other users, but you can take a look at the picks of celebrity investors, like fund managers and financial writers, to get inspiration.
There's not a long enough record to know whether tracking these investors makes sense. In 2001, Kam started the Masters 100 Fund, a real-money mutual fund he manages based on the picks of a rotating cadre of the 100 top Marketocracy players. But Marketocracy started letting its clients invest in the portfolios of a handful of individual investors only this year. For the most part, these investors didn't start out as professional money managers, but Kam says that with about five years of investing data behind them, they were ready to be called up to the big leagues.