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Real Thrills from Pretend Trading Now online contests let you test your stock market skills without risking your money -- and even teach valuable lessons about investing Want to make a few thousand dollars trading Internet stocks -- without risking any of your own money? This may sound like yet another e-mail scam, but there is an honest way to achieve such a goal. All you have to do is win one of the stock market games that are proliferating across the Web. George Mann, 49, a Sanford (Me.) resident, won $1,500 playing Internet.com's game in October with a one-month gain of 91% on the $100,000 of play money granted him in the contest. A factory worker raising six sons, he says he doesn't have the financial resources to play the markets with his own funds. But he is able to take advantage of his fascination with the stock market through the online contests. "I play for the thrill of it," says Mann. "There's always the small piece of you that wishes to go out on a limb and really gamble." Meantime, he has socked away some cash and plans to put $1,000 in a mutual fund or two early next year. Stock market game participants say they learn a great deal about trading from the contests. But, like Mann, the strategies they use to win are not exactly the same ones they use to invest their own money. "To win you have to do what you normally wouldn't do," says Max Barbon, 37, a computer programmer who lives near Toronto. For example, the month he won a contest on MarketPlayer.com he shorted a basket of Internet stocks. For his own portfolio, he doesn't do any shorting. "My broker wouldn't let me," he says.
Unlike simply setting up a portfolio tracker, where you enter the prices (and might be tempted to fudge a little about when you think you would have gotten in), these games operate very much like real-time trading. "You can't lie to yourself about what you would have done or should have done," says Mattson. Also unlike most portfolio trackers, the games take into account trading commissions. The most sophisticated games allow limit and stop loss orders, short-selling, and trading on margin. Many games allow you to look at other people's portfolios and see how they won, and even chat with the best traders among them. If you really want to learn from the contest, however, "you have to close your eyes and try not to win the competition," says Barbon. AOL T-SHIRTS. Although cash prizes are a nice bonus, clearly they aren't the reason most investors play the games. According to MarketPlayer.com, which has more than 70,000 gamers on its own site and also runs contests for sites such as America Online and E*Trade, the top two reasons people say they play are to learn about investing without risking their own money and to have fun. Out of five reasons for playing, the chance to win a prize came in last. America Online added a stock game to its personal finance channel only two weeks ago and already has more than 17,000 game portfolios. Currently the only prize is an AOL T-shirt, although the site plans to add more prizes. Even with no cash to win, "investors are pretty eager to show their stuff," says Rob Shenk, executive director of AOL's personal finance channel. For many sites, such as Internet.com and Raging Bull (which plans to launch a game soon), these contests offer a way to attract and retain visitors. Getting them to use research tools and interact with other users makes a site more "sticky," in Web parlance. Internet.com started the game to promote ISDEX, its Internet stock index. "Now we realize we have a business here, and we're going to really grow this thing," says Internet.com CEO Alan Meckler. For brokerages that have contests, such as E*Trade and My Discount Broker, the games offer an introduction to trading that can turn mere visitors into customers. According to MarketPlayer.com's research, 44% of gamers own portfolios valued at more than $100,000 and 50% earn more than $75,000 a year.
The danger of these games, of course, is that they might persuade a contestant who has a lucky month to play with real money next time. "If you only play for a month and you make a few good picks and decide you are a superstar, you could get into trouble," says Dan Burke, a senior analyst for online brokerages at Gomez Advisors. Ultimately, the games provide the most valuable lessons for investors who use them to scratch an itch to try high-risk stock trading -- without actually putting up their own money. Barbon says he usually suggests to friends who think they can make big bucks trading stocks that they play the games for six months and see how they do. "Most people end up deciding this is a real pain in the butt," he says. "'Fine,' I tell them. 'You've just figured out you should buy a mutual fund." Stone is an associate editor at Business Week Online. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ |
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 Amey Stone covers the markets and investing for Business Week Online WEB POINTERS To visit some of the sites mentioned in the story, click here: Internet.com MarketPlayer.com Raging Bull E*Trade Hoover's Stock Challenge Gomez Advisors | ||||||||||||
