A New Exciting Investing Platform - Kapitall

Last Updated Nov 12, 2009 11:24 AM EST

I got a press release recently from a company in beta stage that will soon be launching a new trading platform. Kapitall will be partnering with TD Ameritrade as a new stock and mutual fund trading platform. What's so different about this? Well, take a look at a few sentences from the press release:
Kapitall makes investing feel like something entirely different -a form of play-that speaks directly to the Gaming Generation and the way they prefer to engage, learn, and interact.

"We believe that investing is an adventure - it's fun, it's challenging, and the more you get into it, the more you get out of it. Our passion is to make the experience of investing as rewarding as the results," said Gaspard de Dreuzy, Kapitall's founder and CEO.
And de Dreuzy should know how to make it fun, since he co-founded three game production, development and consulting companies and produced titles for PC, Xbox, PlayStation and Wii systems.

I navigated around the beta version, and have to say it has some very cool user interfaces, much like an interactive game. Demonstrating its commitment to making investing fun, it uses terms like "playground." I can't speak to whether it makes the "e investing experience as rewarding as the results," but they've definitely got the fun thing down.

My Take

Gaming is a lot of fun, no two ways about it. And in theory it makes all kinds of sense to try and tap into the universal experience of the next generation of techie investors coming up. But theoretically is the only way it makes sense. I've written about the "make it fun" approach before when my son had to learn the stock market game in fourth grade. It was fun for him too, but my take was that it teaches short-term speculation rather than investing.

While I haven't seen the live version, I understand their revenue model is from "trading revenues and premium offerings." I can cite the evidence that higher trading leads to lower returns, that buying individual stocks is taking uncompensated risk, and churning them based on analysts' opinions doesn't work. But who's going to listen to that boring data when there's fun to be had?

Another unique aspect of this site is that it carries a social networking structure, so that consumers can "share ideas with a personalized network of like-minded investors." This sounds to me like just an updated way to follow the herd, which we also know doesn't work so well.

My Advice

The site offered an interesting "investor DNA" quiz, which I took. I was classified as a "fan," which defined me as an investor who just likes to watch the market. It says, "Maybe one day you'll be one of those making millions, but for now you're building your savings and learning the ropes. Who knows? You might be the next Warren Buffett." The next Warren Buffett, me? Really? Maybe I should consult my horoscope for a second opinion.

Well, as long as they are mentioning Warren Buffett, remember his quote, "Investors should remember that excitement and expenses are their enemies." I don't know how expensive this platform will be, but I'd bet very heavily Kapitall will be exciting.


They're not exactly preaching to the choir with me, whose investing slogan happens to be "dare to be dull." Speculation is exciting and having money on the table makes it a huge rush. Unfortunately, that emotional rush quickly gives way to your money rushing out of your pocket and into the pocket of someone else. I agree with Paul Samuleson that "investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas."

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    Allan S. Roth is the founder of Wealth Logic, an hourly based financial planning and investment advisory firm that advises clients with portfolios ranging from $10,000 to over $50 million. The author of How a Second Grader Beats Wall Street, Roth teaches investments and behavioral finance at the University of Denver and is a frequent speaker. He is required by law to note that his columns are not meant as specific investment advice, since any advice of that sort would need to take into account such things as each reader's willingness and need to take risk. His columns will specifically avoid the foolishness of predicting the next hot stock or what the stock market will do next month.

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