Zipporah Wanyoike takes Nairobi Securities Exchange chief executive
Geoffrey Odundo and NIC Bank Group MD John Gachora (centre) through an
earlier NSE Investment Challenge. FILE PHOTO | NMG
There’s a reason student drivers take the wheel for the first
time in abandoned fields. The best place to make all the rookie
investing mistakes, such as running a single-stock portfolio or trading
your
girlfriend’s “hot tip”, is wherever you can suffer the least financial damage.
girlfriend’s “hot tip”, is wherever you can suffer the least financial damage.
Enter the world of virtual-trading
practice platforms—the closest thing to the markets. Here, Joan gets a
chance to horn her skills in a safe environment before graduating into
the real world.
But an added twist to this is the
world of virtual stock-picking contests. These are competitions where
contestants are given an opportunity to trade market products in a
virtual environment within some time-limit. The player(s) with the
biggest gains wins. Sounds familiar. Yes.
This is what the Nairobi Securities Exchange (NSE) Challenge has been trying to do for the past 10 years.
For starters, the challenge is an amazing opportunity for the
younger generation to learn about investing. Participants get an initial
three million virtual capital to trade with using live data from the
NSE during the competition.
The winner is the team (a
maximum of four from the same institution)/individual with the highest
portfolio value. This is great. Of course, as long as one recognises
that a stock-picking game isn’t truly like investing in the real world.
Nevertheless, a brilliant concept.
But
here are a few thoughts to ponder upon. For the many budding youngsters
who’ve already signed up for this year’s challenge (registration
deadline was yesterday), in the real world investors aren’t competing
against other players’ returns; “winning” is about equalling or
exceeding the performance of a benchmark index.
It’s
about keeping your portfolio growing above the inflation line. It’s
about patience – something a three month contest cannot teach – and
resilience.
It’s about the long haul. Success isn’t
determined over weeks or months but years. And, of course, your true
worth should never be tied to your portfolio worth. Reality is: Markets
fail. Fortunes disappear. But life is worth much more.
For
the organisers; thumbs up for this is wonderful initiative. It’s all
good fun – a risk-free way for young investors to work out and learn a
little bit about how investing works.
We all agree
that school leavers (and a big portion of the non-student category) have
little financial education and are unprepared for real life. I choose
to hope that this competition is doing all it can to change that.
But
how I wish the contest would “go down” to the high school level (these
guys are already playing in a fantasy world known as sports betting).
How
I wish the organisers would establish Capital Market Clubs in our high
schools. How I wish more corporate sponsors would support this noble
initiative. Stated differently; if we’re not nurturing “future”
investors today, tomorrow we pay hefty liquidity premiums. That’s a
lose-lose situation.
Finally, glad to note the
positive response—reportedly, 70,000 students have participated in the
challenge over the past eight years. This is the way to go.
No comments:
Post a Comment