Are there investors who can consistently beat the market but aren't working for a big fund manager? Marketocracy thinks so.
Forbes online describes their approach this way:
Ken [founder Ken Kam] and his team have recruited over 55,000 people to manage over 65,000 model portfolios that need to meet strict distribution and activity requirements – just like professional fund managers.
These aren’t people who have thrown darts and gotten lucky with one stock, they are real investors who been featured in the pages of Forbes and BusinessWeek and who have worked hard over the past three years to build up a record so they can have a shot at managing a real Marketocracy fund.
Marketocracy constantly analyzes and ranks all 70,000 investors and each month, selects their 100 best investors, the M100. These are investors who have proven ability to generate long-term results, but who also have demonstrated consistently superior long-term long term stock picking skill as well as shorter-term evidence that their investing style and strategy is working in today's market.
What does this mean? Out of tens of thousands of investors of all types, from value to growth to technical, Marketoracy is able to identify the 100 most successful investors with the hottest hands and bring you their picks.
I suspect that this system works better when it is small relative to the market, so sign up now. When there are a million people involved, or ten million, it'll probably have the same problems that fund managers of large funds have. (Any economists want to weigh in here?)
This model does harness the power of the web to circumvent traditional channels and ways of doing things, giving power and influence to those who were disenfranchised. It also reminds me a lot of electronic marketplaces for forecasting.
You may have heard of these in the context of budget forecasting inside organizations -- markets are set up to trade in various budget forecasts, and individuals inside the organization can buy and sell the forecasts for some nominal benefits. Forecasts created in this way are much more accurate than the traditional methods.
Really, we are just beginning to see how we can use internet technologies combined with computing power to improve many things.
Thanks to creative trend-spotter Apoorv D. for bringing this to my attention.