Practice Your Money Management Skills

Marketocracy is taking its virtual investing platform into the real world by pooling user advice.
This story first appeared in the November 2007 issue of Entrepreneur. To receive the magazine, click here to subscribe.

Marketocracy.com is more than a website where aspiring money managers can practice investing in stocks; the company also manages a very real and highly successful mutual fund. To make winning investment decisions, San Mateo, California-based Marketocracy examines which of its 80,000 members have the best fictional portfolios. About once a month, the top 100 are chosen as part of a paid advisory board. When an advisor makes a promising stock recommendation, Marketocracy vets the advice with all the members who have that stock in their online portfolios. While members don't play with real money, the company does. Co-founders Ken Kam, 47, and Mark Taguchi, 51, say the collective intelligence of their virtual advisory board has identified some hidden investment gems. "When that happens, I call [some of the board members] and ask, 'What is the conventional wisdom about this stock, and why is it wrong?'" says Kam.

The strategy seems to be working: The Marketocracy mutual fund has grown to $55 million under management and posted an 80 percent total return since its inception in November 2001.

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