Wall Street Too Real? Try Fantasy Investing
STEVE INSKEEP, host:
For all the dollars we may save because of lower gas prices, many of us are losing much more from the fall in stock prices, at least on paper. The Dow Jones Industrial Average dropped another five and a half percent yesterday. It's now close to 7500. If you're tired of losing money in stocks, but you still want to keep trading, you might try fantasy investing. It's exactly what it sounds like, sort of like fantasy football. You study up; you pick your stocks; then, you sit back and watch how you would've done if you'd really invested. NPR's Katia Dunn reports.
KATIA DUNN: When Brad Halverson's friends recruited him to be in a fantasy-investing league, he had never purchased a stock. But he jumped right in, devised a strategy and started structuring his fake $100,000 portfolio.
Mr. BRAD HALVERSON (Champion, "Wall Street Survivor"): I failed so miserably at it. I realized that - and the stocks went down so much - I realized that if I just turned it around and played the stocks short I would actually do pretty well.
DUNN: And that, says Halverson, is the beauty of virtual investing. Layman like him can learn how to play the stock market. Now, Halverson is a champion at a game called "Wall Street Survivor." It's one of a handful of popular, virtual-investing games. It simulates the market in real time. Every month, Halverson competes against tens of thousands of people for real cash prizes. Rory Olson is the CEO of Stock-Trak, home of "Wall Street Survivor."
Mr. RORY OLSON (Chief Executive Officer, Stock-Trak): During the peak of the crisis, when AIG was teetering on the brink of this massive disaster, you had survivors that were shorting it. Then, if they saw the chart, signified that it was oversold. They would go long on the stock. And people were just making a lot of money, trading it back and forth, in and out.
DUNN: Olson and other website operators say they've seen tremendous growth in fantasy-investing leagues since the financial crisis hit. Traffic at his website has been up as much as 200 percent, and they've registered an additional 45,000 investors. It's hard to figure why this is happening. But Olson says many of these new investors aren't "Wall Street Survivor" champions like Halverson, but people who never thought much about the market. The current crisis has made them wonder how it works. John Lee(ph) is both a real investor and a fantasy investor.
Mr. JOHN LEE (Investor): People are realizing that they have to take control of their money. Virtual trading is definitely a good start without losing any of that money.
DUNN: Lee says he picked up his first annual report when he was 13 and bought his first stock when he was 18. He thinks the financial crisis has convinced people that investing is not just for business-school graduates. But does a good fantasy investor make a good real investor? "Wall Street Survivor" champion Brad Halverson has won thousands of dollars in fantasy contests. He's developed a unique strategy, but he says, he doesn't quite have the nerve to use it when his own money is at stake.
Mr. HALVERSON: If you're trying to adapt that same strategy that I have to the real world, where you'll be taking some major real-world risks, a whole different psychological challenge there to be able to have the same confidence and the same wherewithal to make it happen in the real market.
Mr. CORY JANSSEN (Cofounder, Investopedia.com): You see portfolios that are much more risky than you would see in real life.
DUNN: Cory Janssen is with the website Investopedia, which features fantasy investing. Janssen says he sees a lot of innovative strategies there, and he agrees that many of them are just too crazy to try it in the real market. The great thing about fantasy investing, he says, is that it allows you to take extreme risks without worrying about the consequences. As for "Wall Street Survivor" champion Brad Halverson, he does hope to someday buy real stock, but at this point, it's still a fantasy. Katia Dunn, NPR News.