Is it just me, or are there an inordinate number of trading contests suddenly going on?
I wonder just what this means in terms of sentiment of the broader markets — a sudden slew of these contests seems to be hitting all at once.
Here’s a quick run down:
If you like ’em fast — your cars, not your trades — then the big contest is the CNBC Squawk Box Fantasy Portfolio / Maserati contest.
The station is promoting this giveaway non stop. They give you a million "Squawk Bucks," and you trade them — based on closing prices — up to 7 times a week. You can garner bonus bucks by answering trivia questions. The winner gets a new Maserati Gran Sport (with the taxes paid by CNBC).
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If you prefer cute to fast, then consider the Forex MINI Trading Contest:>
The top currency trader (you have to open a real account) for the Final Round will win a 2006 MINI Cooper Convertible.
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What if you prefer sexy to cute?
Well, then, have we got a contest for you! The Trading Markets Playboy Stock Picking contest. (Sorry, guys, you have to be a playmate to enter this one).
In 2nd place is the lovely Deanna Brooks, whose turn-ons are "being touched on my lower back, good kissers and well planned
romantic evenings." Deanna likes Yamana Gold (AUY),
because "What girl doesn’t like a little bling? I’m hot for gold this year…" As for turnoffs, she doesn’t care for "hairy backs…especially on men!" (I am not, as Jeff Matthews would say, making this up!)
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If you find all this diversification a "distraction," then consider the 10th annual My One and Only stock-picking contest. That’s right, one stock, no fooling around. (hey, Diversification is over-rated!). And, if you are in the UK, there is The Independent’s Share Challenge (read about it here), and the Trade2Win’s Share Trading Competition. There’s also the Real Challenge, and the Dow Jones direction contest.
That’s before we get to all the college and high school contests.
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I honestly do not know what to make of all these contests; Marketwatch warns us that CNBC is playing a dangerous game, and the contest employs "gimmicks of varying types," including a game show-like sweepstakes where "you can add bonus points to your portfolio by watching Squawk Box on CNBC every morning.
From a broader perspective, I wonder how much all these contests reflect a broader trend towards speculation. We’ve noted in the past that low quality stocks have been relatively outperforming; that Nasdaq volume has been outpacing the NYSE’s; and that there’s been a big spike up in bulletin board stock volume.
Are all these contests just another in a series of warnings that speculation has dramatically risen?
Perhaps.
As in most "external sentiment" issues — those not generated from market data — these are hardly precise in their timing; But they certainly are worth noting as potential warning signs . . .
500 mil mkt cap, long only, end of day price assignment,no etf’s, hardly a trading contest.
Speaking of AUY, I’ve been trading in and out of it since the $3.80 level in August, and it has been an insane ride. Gold is the new black.
Speaking of stock trading contests there is one in my local paper, The Dallas Morning News, that shows the results so far in every Sunday papers business section, that pits one “professional” against a grade school class, middle school class and high school class picks and so far the “professional” is getting clocked by all three! It is hilarious. They all started with a theoritical $100,000 to invest and all the kids are up and the “professional” is down to approx. $85,000.00 My personal opinion is that this is the perfect example of why the majority of “professionals” actually know less than most people and are actually nothing but salesman who look good in a suit!
2 elements to remember when we look at contests:
A) Risk is a big factor in returns — when you see the leaders, its usually because they had concentrated positions in high beta names.
B) Do not under estimate the impact of Random chance in returns . . .
I’d suggest playing REM:
“It’s The End Of The World As We Know It”
And for some strange reason I do “Feel Fine”…well, the sun is shining in London. Must say, it’s a bit worrying when such an overwhelmingly (nauseatingly?) “serious” rag like the UK’s Independent starts touting a trading game.
Ah well, the US and the UK have got to keep all those out-of-work real estate agents and mortgage brokers employed somehow…
I know, the US is ahead of the curve on that score at the moment, but I have a feeling the UK situation is going to rush past the US at some point relatively soon like an out of control 1992 Ford Escort hot-hatch (driven by a nutter high on speed) overtaking a lumbering, wheezing Suburban on three wheels…and fly straight off a cliff.
It’s a mad, mad world.
Barry,
It’s more likely desperation to boost their Q-rating/share, rather than any kind of reflection on the market.
When I’ve lived where the cable system carries CNBC, I rarely if ever watch it. It’s a joke, just a bunch of happy-clown shills spouting tha latest bandwagon conventional wisdom. They’re like the media outlet of the sell side analysts…everything is rainbows, unicorns, and cuddly puppies.
Our cable news outlets are in a sorry state as well. Before Al Gore bought out the thing and replaced it, I used to rely on the Canadian Broadcast Co. version of a CNN type channel. It was more international, less biased, and without all these clownish shenanigans like this stock picking hoo hah, the chief pumper clown Cramer, and the CNN/FOX tabloid missing white woman/Michael Jackson/OJ hour.
Besides…a Maeserati? Who are they kidding, it’s an overpriced piece of shit. Give me a 540i or E420, hell I’d take an F150 over that piece of junk.
You are correct, Barry. It’s a sign of an overextended, crazy market. Of course, overextended, crazy markets have a way of getting even more extended and crazier.
From a different perspective, these contests provide a new way to find successful traders. You don’t have to go to an elite school, you don’t have to beg Goldman Sachs to hire you, you don’t have to be related to anyone important.
The Internet is providing a paradigm shift by creating a new way of locating talent.
If you can show your stuff in a competition, they will come.
Google: jnavin
Almost on topic to having market contests on market network is recent study showing good correlation with higher market participation on Australia’s biggest horse racing day. Betting begets betting.
http://guambatstew.blogspot.com/2006/04/aiding-betting.html
Stop me if you’ve heard this one before:
Volume sucks, breadth sucks and the number of new lows is expanding, but the Naz is up (again).
Not sure how long I’ll hold these babies, but if we stay up here till the end of the day, I’m taking on some index shorts.
No Contest
Barry Ritholtz seems to think that with the recent proliferation of stock picking contests, the market coverage is starting to look more like the Game Show Network. And he wonders if it all means something:
From a broader perspective, I wonder how muc…
I would assume that INSIDER trading rules are not necessarily enforced when it comes to these games. And typical investor pscyhology is also thrown out the window. So the flaws in the results/data are numerous.
To the original point, they sure look like contrarian signposts to me. But to consider the results as anything close to “real world” is just silly. If I’m playing with house money, why not take the riskiest bets? Now, it’d be really interesting if you had to buy in with your own money, and the winner gets the Italian sportscar. Then you’d see some real riverboat gamblers.
Bynocerus-
I think you are beginning to repeat yourself. :)
Long: Cash, gold and everything else hedged to the hilt.
Barry:
“Hairy backs” and “hot for gold this year” in the same web site? Are you SURE you’re not making this up???
This must be a top in gold…
Great stuff.
The alternative station in Houston now has a feature called “Rock your Stocks” with a daily market report. What is that about?
Then the FM Talk station has this energy analyst on the other day named “Petro-damus.” He was predicting crude prices and helping out the show with their oil futures. NO JOKE!
Not sure how long I’ll hold these babies, but if we stay up here till the end of the day, I’m taking on some index shorts.
Posted by: Bynocerus | Apr 5, 2006 1:40:55 PM
Wow, what a huge scalp from my shorts on the close yesterday! I’ll be sure not to spend that all in one place. Of coursre, I may not have anything to spend since we’re right @ 11:00. Those buy programs should kick me out of the money any moment now. Who decided 11:00 was the magic hour for the buys programs anyway?
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