Capital Market Clubs
Geoffrey Odundo
Nairobi Securities Exchange
NIC Bank Group MD John Gachora

NSE challenge should go all the way to high school level

Virtual trading platforms helping to sharpen skills ahead of the real stocks world for learners.

NSE challenge should go all the way to high school level

Zipporah Wanyoike takes Nairobi Securities Exchange chief executive Geoffrey Odundo and NIC Bank Group MD John Gachora (centre) through an earlier NSE Investment Challenge. FILE PHOTO | NMG

There’s a reason student drivers take the wheel for the first time in abandoned fields. The best place to make all the rookie investing mistakes, such as running a single-stock portfolio or trading your girlfriend’s “hot tip”, is wherever you can suffer the least financial damage. Enter the world of virtual-trading practice platforms—the closest thing to the markets. Here, Joan gets a chance to horn her skills in a safe environment before graduating into the real world. But an added twist to this is the world of virtual stock-picking contests. These are competitions where contestants are given an opportunity to trade market products in a virtual environment within some time-limit. The player(s) with the biggest gains wins. Sounds familiar. Yes. This is what the Nairobi Securities Exchange (NSE) Challenge has been trying to do for the past 10 years.

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For starters, the challenge is an amazing opportunity for the younger generation to learn about investing. Participants get an initial three million virtual capital to trade with using live data from the NSE during the competition. The winner is the team (a maximum of four from the same institution)/individual with the highest portfolio value. This is great. Of course, as long as one recognises that a stock-picking game isn’t truly like investing in the real world. Nevertheless, a brilliant concept. But here are a few thoughts to ponder upon. For the many budding youngsters who’ve already signed up for this year’s challenge (registration deadline was yesterday), in the real world investors aren’t competing against other players’ returns; “winning” is about equalling or exceeding the performance of a benchmark index. It’s about keeping your portfolio growing above the inflation line. It’s about patience – something a three month contest cannot teach – and resilience. It’s about the long haul. Success isn’t determined over weeks or months but years. And, of course, your true worth should never be tied to your portfolio worth. Reality is: Markets fail. Fortunes disappear. But life is worth much more. For the organisers; thumbs up for this is wonderful initiative. It’s all good fun – a risk-free way for young investors to work out and learn a little bit about how investing works. We all agree that school leavers (and a big portion of the non-student category) have little financial education and are unprepared for real life. I choose to hope that this competition is doing all it can to change that. But how I wish the contest would “go down” to the high school level (these guys are already playing in a fantasy world known as sports betting). How I wish the organisers would establish Capital Market Clubs in our high schools. How I wish more corporate sponsors would support this noble initiative. Stated differently; if we’re not nurturing “future” investors today, tomorrow we pay hefty liquidity premiums. That’s a lose-lose situation. Finally, glad to note the positive response—reportedly, 70,000 students have participated in the challenge over the past eight years. This is the way to go.

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