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Tess Vigeland: Ever wonder how much you could get from careful — and perhaps lucky — investing? Five percent, 10 percent? How about 7,000 percent? Now before you get whipped into a frenzy, what we’re talking about isn’t a stock, or a new market strategy. It was an online stock market game in Germany. It let contestants use real market prices to trade. And though the portfolios used fake, Monopoly-style money, the winner got a very real prize.
Our Economy 4.0 correspondent David Brancaccio was in Germany when he heard about the contest and he managed to track down the champion.
David Brancaccio: First things first. Help from a German colleague on how to congratulate the contest winner when I meet him.
Angelika Ditscheid: Wunsch.
Angelika: Very good, excellent.
Brancaccio: What’s the rest?
Angelika: Zum gewin des Porsche.
Catch that? “Porsche,” as in a $144,000 German sportscar. The Grand Prize Carrera S.
I’d heard about the contest…
Rainer Riess: A tool to bring a lot of new people into the stock investment world.
…from Rainer Riess, a honcho at the Frankfurt Stock Exchange, during a chat about persuading reluctant Germans to buy and sell stocks after so many got burnt during the dot-com and IPO mania 10 years ago.
Riess: A virtual portfolio to try to really resemble how stock exchange trading works.
Fake money, real prices, three months — sponsored by the German exchange and the newspaper Handelsblatt. Nineteen-thousand entries and the top prize went to one Klaus Neukert of Munich. Sure, he said, meet him at the cafe in the lobby at work.
Time to try out my canned congratulations.
Brancaccio: Herzlischen gluck wunsch zum gewin des Porsche.
Klaus Neukert: Vielen dank. Thank you very much!
Turns out Klaus, fresh-faced, 30-years-old in a puffy down jacket, speaks English just fine. He started the contest with 20,000 “virtual” Euros. Like real life, there were transaction costs, a hefty 50 fake Euros a trade. Three months later, Klaus’s virtual portfolio had 1.4 million Euros in it (U.S. $1.8 million).
Neukert: Yes! It’s unbelievable!
He started off buying and selling quickly.
Neukert: It was kind of day trading.
Then he turned to derivatives based on the key German stock index, the DAX.
Neukert: You can bet on it if it will fall or if it will increase.
Brancaccio: How was it that you were able to figure out dervivatives?
Neukert: It was quite easy for me.
Did I mention Klaus is a finance expert at a fancy bank that from the outside looks like a pair of 20-story-tall rockets of capitalism ready to launch? But perhaps his biggest blessing: The contest had an end date. With more time, Klaus figures the law of averages would have caught up with him.
Neukert: It’s, to be honest, it was a lot of luck.
German Porsche 911 commercial: Die Neue neun elf.
Die Neue neun elf: “The NEW 911” prize Porsche presents a different kind of financial challenge. Insurance costs a fortune, about $9,000 a year — cash he could use for the house he’s building with his wife in case they have kids. Also, he’s been told the car will lose 10 percent of its value the moment he first drives away, but it won’t lose more for a few months, if he keeps it free of dents. He’s thinking he might hold onto the car during this plateau of residual value.
But it’s not like he needs a car. Klaus already owns a scooter and one other vehicle, a pokey, snub-nosed Smart car. So to keep or not to keep the Porsche is going to be quite a choice when he takes delivery up in Frankfurt.
Neukert: At least I have to drive back to Munich. I think on the autobahn it will be fun.
In that car, on that road, he can do the 250-mile ride home in under three hours — time enough to ponder whether he wants to make the Smart car choice or the fast car choice.
In Munich, I’m David Brancaccio for Marketplace Money.
Vigeland: You can find more from David plus a peek at a virtual stock exchange game for kids on the Economy 4.0 blog.
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