Chris Lau - Seeking Alpha

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Tuesday, March 03, 2009

The KaChing Evolution

One of my all-time favorite movies was The Matrix. The movie is about A computer hacker, Neo, who learns from rebels about the true nature of his reality and his role in the war against the controllers of it. To reach this, Neo asked repeatedly the question: "What is the Matrix?"

So what on earth this have to do with KaChing?

For Neo to be found by Morpheus is akin to investors being found by KaChing.
KaChing launched last year as a fantasy stock exchange Facebook application. It sought to find the top investors from around the world. It has done this by enabling ordinary and professional people like you and I to manage $10,000,000.

It has so far attracted over 360,000 users. KaChing is on track to move forward in its business plan to turn a virtual world into...a real one. See here. The phrase "Welcome to the real world" comes to mind.

In short, KaChing plans to link real accounts to virtual trading accounts. This means that real money will be invested (by linking) to the activity of a Portfolio Managers' virtual portfolio. Top-performing accounts will likely attract the most assets, and therefore skilled as opposed to lucky traders will make real money. I would argue that both skill and luck are required to succeed in either a fantasy or real world.

This is What KaChing Is (From its FAQ):

You are given $10 million in virtual money to invest when you join the application. You may invest it long or short in any US listed stock or ETF. In order to make a trade, just type the company name of ticker symbol for the stock you want to buy or sell in the box next to the "Trade" button at the top of every page and click "Trade." In order to get ideas as to what to buy or sell we suggest:

  • Visit the "Find Managers" page to find interesting managers from whom you can get investment ideas;
  • Click on the names of the top ranked people on the site and see what they own (you can also ask why on their Wall);
  • Visit the "Research" page to read in-depth stock analyses written by kaChing managers;
  • Check out the "Insight" page for stocks that our best investors own that the community at large doesn't;
  • Read the Home page Wall for ideas;
  • Ask your friends
I am sure that there are many other virtual trading sites. I was on one called marketocracy.com but never liked it. KaChing is different. It's not just a site about making trades, but a site built around social networking.

Humility comes to mind when I am competing with stock traders who have returned well over 440%.

What's the big deal with Funny Money?

Morpheus: “There’s a difference between knowing the path and walking the path.” (Isaiah 2:3)
Anyone who wants to make money from investing needs to do more than read about security analysis or know about what is going on all around us. We need to walk the path. KaChing's platform allows anyone to do this.

Know Your Reality by Knowing Who Runs The Matrix ala KaChing

KaChing has impressive crew maintaining and building the application. It is run by Dan Carroll, founder. It has a number of engineers who worked on the analytics sides at Google.com. It is backed by a venture capital, fund, the most engaging capitalist being an active user and a Professor of entrepreneurship at Stanford University.

Since reality is more than just number crunching and analytics, here is a search engine one might want to use to find others who share the same investment characteristics (respectable return, low turnover, low risk trading activity).

Give Me Stock Tips Now!
  1. Open-minded investors might want to check out Insight for stock tips. "Give me a stock tip." That is the most popular question I receive, next to "When will the market bottom." http://www.kaching.com/kaching#insight
  2. Search for hot investors here: http://www.kaching.com/kaching#find_managers/period=half_year/sort=gain/gain=-0.3,/kaching_risk=,100/num_positions=5,
  3. Look for quality, not quantity. Look past performance and read the details with the research section here: http://www.kaching.com/kaching#research (better yet, search for good performance and then read the research that backs the user's activities).
Note for #1: Insight answers the question "What are the best performers doing that others aren't?" Treat the stocks below as though they are the top recommendations from our best managers.

Stock tips from the Insight engine, as of Monday Mar 2 2009:
3 Month Return comparison here:

KLA-Tencor Corporation @ 19.54 - Short - ~+5% Return
Applied Materials, Inc. @8.85 - Short - ~0% Return
Boston Scientific @ 7.52 - Long - ~5% Return
POWERSHARES DB CRUDE @232.54 - ~100% Return
Silver Wheaton @ 5.31 - Long - ~100% Return

In the book, Outliers, Malcolm Gladwell observed that:

"Success is a function of persistence and doggedness and the willingness to work hard for twenty-two minutes to make sense of something that most people would give up on after thirty seconds."
Morpheus said, "Welcome...to the real world." KaChing is the site that offers the environment to allow everyday people to put the work hard for those twenty-two minutes in learning to become a better investor in the real world.

Everyone else will be the ordinary people - the speculators - who have already given up long before twenty-two minutes. In the world today of attention deficit disorder, thirty seconds seems like a very long time. For the speculator, twenty-two minutes must feel like eternity.

Here is a link to KaChing's website.
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