A free platform, which is giving away investment formulas based on the strategies used by multi-millionaire investors, is hoping to democratise stock market investment
Ordinary people can now invest as Warren Buffett, James Slater or Sir John Templeton do by using a free algorithm that mimics the stock-screening, buying, and selling decisions of the world’s most successful investors.
This is the claim made by husband-and-wife team Maria and Michel Jacquemai, founders of “financial Facebook” meetinvest, who crunched the formulas used by multi-millionaire market players to allow anyone to use their principles to make money.
“We want to empower investors by giving them the same toolkits that the professionals have,” says Maria. “The financial world wants to keep this kind of information a secret but we have decided to give it away for free.”
The pair has used data that is in the public domain as the basis for their calculations. This avoids the necessity of seeking permission from the likes of Buffett, who many not want thousands of people copying his stock strategy.
Michel, who worked in asset management, hedge funds and banking for 20 years, says that he consumed every book and article written about superstar investors in order to gather enough information to create meetinvest’s digital “experts”.
“We found James Slater’s formula on the Telegraph,” he says, laughing. Slater wrote a tips column in the Sunday Telegraph called The Capitalist for many years.
The way meetinvest works is straightforward: registered users choose from 12 experts on the site, which range from the big names such as “father of value investment” Benjamin Graham, to German former investment fund manager Susan Levermann. They then choose from 20 strategies, focusing on areas such as spin-offs and exploiting judgement bias. New experts and strategies will be added regularly: Slater is the latest addition, launching this week.
All the investment models are explained using plain English, which is crucial to the meetinvest model. According to a study of 2,000 adults commissioned by meetInvest and undertaken by YouGov, 45pc of people find the stock market “confusing”. Some 39pc also said that they would be more likely to invest in the stock market if they had access to free and easy to understand information.
“We strip out the financial jargon,” says Maria. “The idea is to make investing as simple as possible for people that don’t have access to either the formulas or up-to-date financial information, which can only be accessed via a Bloomberg terminal.”
meetinvest monitors and analyses real-time financial market data on 68,000 stocks worldwide each day, and users can select specific industries or territories – US biotech, for example – and then back-test their chosen algorithms on the platform all the way to January 2000 to see how much money they would have made if they’d placed the suggested trades.
The Jacquemais have invested £1m into four different “baskets” or portfolios to show the effects of the investment formulas. “We are using our own money,” says Maria. “We want to be completely transparent about whether these systems work and how much money we make.” These will be live on the site shortly.
meetinvest can also show the effects of implementing the opposite investment strategy. In order to show the effects of these reverse algorithms, there is a basket doing just that. “We wanted to prove that performance isn’t dumb luck and the only way to do that is to try to lose money,” says Michel. “And we have shown that when you reverse the formula in that basket, that is what happens.”
Users can opt to receive daily, weekly or monthly updates on which stocks to keep and which ones to offload. To avoid paying high transaction costs, Michel advises changing portfolios monthly.
However, the CIO from a global private bank, who preferred to remain anonymous, warned: “It is not enough to rely on these formulas – you must do your own research, and you have to measure risk. If you’re right, you make money but if you’re wrong you could lose everything.” A spokesperson for JP Morgan Asset Management declined to comment on meetinvest’s new business model or its consequences for traditional investment firms.
The Jacquemais have spent £350,000 building the platform, which now has just shy of 2,000 users. “We want to have 1m within a year,” says Maria.
The pair are in talks with several VCs about raising further start-up capital but the focus now is on new users. After that, the revenue model should become apparent, says Maria.
They hope to encourage people to return to the site by building in a social aspect. Members can chat about shared interests across 800 categories, ranging from coin-collecting to wine-investing.
Every formula on the site can be easily exported to an Excel document, an approach that is essential to the democratisation of the market, says Michel. “When I worked in that world, I saw some disgusting practices. Friends had fund managers who charged sky-high fees to make them 3pc a year. It wasn’t fair.
“Every other sector has seen a movement away from the push economy – where we are forced to choose the products that our shoved down our throats – to a pull economy, where we say what we want, when we want it,” Michel adds, citing Netflix and Zoopla as examples of pull economics. “We want to do this in investment for the first time and create a mass wave of DIY investors.”
Photo credit: REX
Direct link: HERE