from Hacker News

Request for Startup: Codecademy for Stocks

by yoseph on 2/6/12, 7:46 PM with 28 comments

  • by yannickt on 2/6/12, 8:13 PM

    This reads like a request for a startup to teach people how to pick stocks. I am not sure this would be particularly useful, and I fear it could be dangerous. There is plenty of evidence that the average investor, instead of obsessing over the return on investment, would be better off putting their money in index funds and focusing on things that are in their control, like their savings rate, (tax-efficient) asset allocation, or minimizing investment fees. There is no shortage of accessible material on the subject.

    Also:

    "The old model of financial advisors, mutual fund managers and brokers is dying fast."

    Is there any evidence to support this? I.e., are mutual fund managers making less money? And if formally trained investment professionals, as an aggregate, are not good at managing money, is it reasonable to think that individuals will do better with a code academy for stocks?

  • by veyron on 2/6/12, 9:31 PM

    The real problem is that the biggest lessons you have to learn (e.g. self control, ability to tolerate a small draw-down, discipline to act on winners and losers if your theory doesnt pan out) require a real-money test. You can learn modeling etc from a book, but the experiential knowledge requires you to play with cash.

  • by DevX101 on 2/6/12, 8:03 PM

    Its usually a bad idea for individuals to hold specific stocks.

    Its never a bad idea for individuals to learn some basic code.

  • by IceCreamYou on 2/6/12, 9:01 PM

    I sort of tried doing this for the PennApps Hackathon in January: http://unstock.me/

    It turned into a silly little linear game. We realized that intelligent investment in the stock market requires setting up advanced models that require math beyond what most people can manage. If you're not working with such a model, you're probably losing money to the people who have one. There are some general concepts to learn about the stock market that don't have to do with math, but they're mostly pretty obvious and hard to make into a fun, game-like format.

  • by rayhano on 2/6/12, 8:25 PM

  • by corkill on 2/6/12, 10:13 PM

    Except Codeacademy you are learning a skill which can be used to create.

    Stock picking is essentially staking your money on something which you have no control over. I'm not against people learning about it. But yeah tons of better things to learn about, don't think it would take off. Seems like something to cover this would need to be more like an ongoing game and a lot less like code academy lessons.

    Why do stock analysts, market experts etc even exist when they can hardly predicate things better than the average investor? Because there is a demand for them.

  • by andr on 2/6/12, 8:27 PM

    There is a generally-accepted way to write software that works, even if there are alternative approaches.

    With finance, there is not one generally proven way to make money. Once you get your feet wet in a financial market, there are no rules on how to make money or value stocks and other investment instruments. Experienced finance types lose money all the time. Someone that only completed an interactive learning game is bound to lose their savings.

  • by nirvana on 2/6/12, 8:17 PM

    The difficulty in this is that there's a much more cohesive perception of how you program javascript than there is on how you invest in stocks. In fact, for much of javascript there's little debate, yet for stocks there are large numbers of people who have been sold falsehoods and have become emotionally invested in believing them. Even the people who haven't fallen for snake oil are rather diverse in their investing strategies. For instance, my preferred vehicle, stock option spreads, are considered "too risky" by many people, and for others they just have trouble wrapping their heads around them.

    So, I think the first thing that you'd need to do for such a startup, is to limit your audience to people who are independant thinkers, people who want to invest themselves and want to take control over their financial lives and haven't given up on the idea that they can be successful doing so.

    This may have been obvious when you were writing the RFS, but I'm not sure what percentage of the market that is.. and if you want to address the whole market, you've got a lot of myths to deal with. (like the idea that the market is efficient, or that individuals can't pick stocks, or that mutual fund managers are better at managing money.)

    Or, put another way, maybe the first module in such a system would be disproving these myths.

  • by nirvana on 2/6/12, 8:40 PM

    Think Or Swim, is an options trading platform, that has some very good software for analysis. You can get a free paper trading account from them. Probably some of the best training you can get would be to take that paper trading account, reduce the amount of cash (it starts with $1M) to the amount you really have to invest, and then start investing.

    It lets you go back in time and buy or sell on specific dates in the past. This allows you to back test mechanical strategies. But for working with real time events, paper trading lets you make your trades with no knowledge of the future, see how you do as time goes on and have no money at risk.

    Always a good idea if you're going to do anything with increased leverage (like shorting or options).