The Poor Man's Stock Market Investing Challenge

OK. So, I've been thinking about a way to start a stock market investing challenge for my site here and did some thinking about how I'd like to go about it. What I came up with is a different kind of challenge that I hope I'll get some takers for. My guess is that I'll be on my own for the first several of these but here's the background and I hope you'll participate.

I wanted to look at investing in the stock market from a beginner's perspective. I also wanted it be a challenge for even the best investor. In the end, I hope that it benefits both. I started my search for a stock market simulator to host my little challenge and after narrowing it down to investopedia and the virtual stock exchange, I settled on the vse because it seemed a little easier to work with. My first step was to review some of the other stock market games going on there and noticed that alot of them started with way too much money. There was one that had $1 billion dollars! Talk about a huge investing fund. That is really unreal. Even a $100,000 which is what a lot of them started with seemed a little over a beginner's head. It also gives the strong investor a lot of cushion.

What I decided to do then was reduce the investment fund to the size that many small beginning investors might want to start with but don't think that it's possible to succeed with. And, for that reason, never start investing in individual stocks at all. While I believe it's probably not the ideal approach and the investment method probably ought to be different, I'm motivated by William O'Neil's book -- How To Make Money In Stocks. In it, he says he started at age 21 by investing in just FIVE shares of Proctor and Gamble stock.

To see what's possible, I decided that this investing challenge would start with a mere $500 dollars. I am pretty sure that this is the amount O'Neil started with in his investment club. Starting in February 2010, I'm going to start the challenge. You'll be able to join at any time you might come across this.

The beauty of this challenge is that it puts a financial limitation on all participants that many new investors face. I look on the internet and see so many get rich quick ideas from forex to options. To me, the best option is the stock purchase. It's easy to understand, yet hard to make money doing. I am big believer that the average guy can do as well as his investment advisor. He only lacks one thing and that's experience.

What the small investor needs is a gym to practice in to gain confidence. And, while it's my belief that you really can't learn true investing using a simulator because the emotion isn't the same. You can work on your mechanics. You can work on your fundamentals. You can work on your system. Just like sports, the real work is done when no one is watching. You've got to do the same with investing. You've got to work at it. But before the season starts, you've got to get in game shape. That's what this challenge is about. Helping you get ready for the big game.

As part of that, some good coaches in the gym at the same time would help beginners, so I will extend an invitation to some of the better known investment bloggers that I read and see if they'd be kind enough to join us. But, to be honest with you, I doubt I'll have any takers.

The hard part is that since my site is pretty new, I really have my work cut out for me. You see when you first start out working on a site, you don't have any readers. And, the established sites aren't so sure that you'll be around tomorrow, so they are a little skeptical to help you out as well which is understandable. You could have the best site in the world, with the best content but in the end it doesn't really matter. You see, I know that everyone started a site just like I did. With no real base of people reading their site, you still have to start somewhere writing content, even if no one reads it and if you are one of my beginning readers, I hope that you'll join the challenge when you come across it and see what you can do. As time goes on, we'll win a few more people over.

To join the challenge, go to virtualstockexchange.com, register and enter the game id: investingchallenge

UPDATE: I got to looking at investopedia and decided to set up a second challenge over there. Go to simulator.investopedia.com and find the Poor Mans Stock Market Investing game that starts with $1000.

Then join the game. It's FREE. Good luck!