a r k e t o c r a c y r u l e s
|| December 13, 2013
Marketocracy rules are divided into 3 sections:
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are the most stringent rules for virtual portfolios.
Funds must adhere to the compliance rules in addition
to the general rules in order to qualify for official
rules are enforced for all portfolios. If youre
using the Marketocracy site for learning purposes,
and not for the competition, these are the ones you
need to pay attention to.
rules are general site usage rules and apply to all
members and visitors.
following are additional rules required only for individuals
who wish their funds to be given an official Marketocracy
Performance Ranking. Performance Ranking is an educational
and skill metric, it is not a chance contest or game;
there are no prizes. Ranking is required for individuals
wanting consideration as fund managers, but ranking is
not an offer of employment. Individuals who are using
Marketocracy's tools solely for their own education and
personal use will not be subject to the following rules.
We supply a compliance report to help you track your
compliance for each of your virtual funds.
qualify for ranking, funds must have a start date prior
to the beginning of the ranking period. For example, for
a fund to be ranked for Q1, it must be started on or before
Dec 31st. Funds started during a ranking time period will
be automatically considered for the following time period.
like real mutual fund portfolios, all model funds at Marketocracy
must pass a diversification test. In our case, funds are
considered "non-diversified" mutual funds. Here's
how the Marketocracy diversification test works: For a
majority of each period, your fund must meet guidelines that are
similar to SEC and
IRS rules regarding fund position concentrations.
For your fund to be "non-diversified":
position can exceed 25% of your total portfolio value.
your portfolio must be comprised of positions under 10%
cash position isn't limited by this guideline, although
you must be 65% invested, see below (but if you've got
too much cash, your performance may suffer!).
a look at this example: Let's say that your $1,000,000
fund holds 23% of total assets in Apple, a 22% stake
in Lucent, and 8% stakes in Cisco,
Yahoo, Amazon, and Charles Schwab - with the balance
in cash. This fund complies with the
because the Apple and Lucent positions, totaling 45%,
or $450,000, make up less than half of the fund's value,
with neither position exceeding 25% (or $250,000).
In the other half of the fund, no one position (excluding
cash) totals more than 10% of fund assets.
that do not pass the quarterly diversification test will
be disqualified from the Marketocracy Performance Rankings.
will also be monitored for style drift. For a majority
of each quarter, both general and industry specific funds
must have at least 65% invested in stocks corresponding
to their investment focus. Cash is not considered a qualified
investment when calculating the 65% investment threshold.
All funds, regardless of focus, must be 65% invested in
securities a majority of the time.
Funds that fail to meet these criteria will
be disqualified from the Marketocracy Performance
Your fund must be in compliance with the diversification testing and
style drift for a majority of the period in order to be considered for
member may buy into a position that is greater than 25%
of the fund value. If you violate this rule, your fund
will be out of compliance until you sell enough of the
errant stock to bring its value below 25% of your fund's
total value AND you have brought your fund back into complete
compliance with ALL other Marketocracy rules. In addition,
the effective inception date of your fund will be reset
to the date that you bring the fund back into compliance
with ALL Marketocracy rules.
example, if a fund violates the "25% rule" on September
14, 2003, then comes back into compliance on October
20, 2003, the effective start date for the fund will
be October 20, 2003. The fund will not be eligible for
year 2003 fourth quarter ranking, as its effective start
date is after the beginning of the fourth quarter. In
addition, the fund will not be eligible for m100 rankings
until 6 months after October 20, 2003, and will not be
eligible for ITD rankings until one year afterwards.
that while a position in the fund may appreciate above
the 25% cap, even an appreciation to over 25% will have
to be adjusted in order to meet the compliance rule for
a majority of the period.
fund can hold more than 25% of invested assets in Exchange
Traded Funds (ETFs) for a majority of the quarter. ETFs
include exchange traded indices such as QQQ.
further simulate the experience of running an actual mutual
fund, the top funds ranked by quarterly performance in
each fund category may receive fantasy cash "inflows" or
new investments on a periodic basis in the following quarter.
Similarly, a certain number of the worst performing funds
in each fund category may have fantasy cash "outflows",
or redemptions of cash, in the following quarter. Fantasy
cash inflow and outflow amounts will be calculated based
on performance ranking and are credited to, or debited
from, funds at times and in amounts that are at the sole
discretion of Marketocracy, Inc.
Cash inflows and outflows do not change your fund's NAV; however, having
extra cash on hand from new investments in the fund, or having to sell
positions to raise cash for fund redemptions, may affect fund performance.
order to qualify for ranking, individuals must have, and
must certify that they have, only one account on the Marketocracy
website. Individuals with multiple accounts will be disqualified.
order to qualify for ranking, funds cannot be set up that
simply mirror other existing funds (either virtual funds
on Marketocracy or existing funds in the market.) Marketocracy
reserves the right to disqualify such "mirror" funds.
A fund is considered a mirror fund if the holdings
overlap with another fund (real or virtual) in excess of
50% of total fund value.
qualify for rankings in a particular sector, your fund
must have 65% of its invested assets (excluding cash) in
a given sector. Marketocracy currently uses the S&P
Global Industry Classification Standard (GICS) to sort
stocks into sectors. (For further details regarding GICS,
see the S&P
website). Companies are classified into each sector
by S&P, and that is the classification utilized on the
site. Check your Sector report for each Marketocracy fund
to get a breakdown of your portfolio by sector.
that qualify for a given sector will automatically be considered
for sector rankings, as long as they meet all compliance
rules. All compliant funds, regardless of sector, are eligible
for the overall rankings. It is not necessary to be in
a particular sector to qualify for the overall rankings,
this rule only applies to those who wish their funds to
be eligible for sector rankings. To get a breakdown of
a fund by sector, click on the fund's name, then click
on the "sectors" link under the "my funds" heading
in the left navbar.
trading of options, bonds, futures, commodities or mutual
funds is permitted in order to qualify for ranking.
will be allowed to have a negative cash balance of up to
5% of total assets under management in order to provide
a buffer for filling orders and charging management fees.
In the event that a members fund develops an excessive
negative balance, it may not total more than 7 days per
quarter and it must be cleared by the end of each calendar
quarter in order to qualify for ranking. Negative balances
are to cover short-term differences in cash needs versus
available cash, not to fund purchases (i.e. margin purchases).
Inc. and its wholly owned subsidiaries do not guarantee
employment consideration based on performance rankings.
Marketocracy's goal is to utilize the virtual track records
on our website to find the best investors in the world.
Marketocracy Inc. and its subsidiaries reserves the right
to consider the performance rankings as an initial screening
device for future potential candidates. Marketocracy reserves
the right to apply additional employment criteria in its
consideration of any candidate.
are determined during each time period based on the information
we have at hand at the end of each time period. In order
to be eligible for ranking, a fund must a) be created before
the start of the ranking period and b) comply with all
Marketocracy rules for at least 50% of the ranking period.
addition, to be eligible for inception-to-date (ITD) rankings,
the fund must be at least one year old. For m100 rankings,
the fund must be at least 6 months old. The minimum required
fund lifespan will increase as the number and lifespan
of compliant Marketocracy funds continues to rise.
that if you violate the rule against buying into a position
that is greater than 25% of the fund's value, the effective
inception date of your fund will be reset to the date that
you bring the fund back into compliance with ALL Marketocracy
a member feels an error has been made in their account
regarding their virtual funds' performance or compliance
calculations, the member must contact Marketocracy via firstname.lastname@example.org prior
to the end of the period in question. Marketocracy reserves
the right to make the final judgment on all performance
must provide a valid email address in order to qualify
for the m100.
becoming a member of the site, all participants understand
that the following rules will apply to each fund created.
registered member of Marketocracy will be allocated $1,000,000
(US) in fictional Marketocracy dollars to manage per fund.
Each registered member may build and track up to 10 unique
funds, each with a limit of 200 stocks.
may register and create funds at any time. All funds will
be tracked by calendar quarter performance, year to date
performance, and by performance since fund inception.
fund will be tracked and ranked based on the change in
its net asset value (NAV) over a specific period of time.
Specifically, fund performance at Marketocracy, and among
professional mutual funds, is measured by calculating the
change in NAV during a defined period of performance ranking.
The NAV of an investment fund is calculated by dividing
the current value of its holdings by the number of shares
outstanding. All model funds at Marketocracy will begin
with $1,000,000 in fantasy cash, with 100,000 shares outstanding
and a $10.00 NAV. For a further explanation of the Net
Asset Value methodology, click
has endeavored to create a real-world stock market simulation
for our model fund managers. We believe that the best long-term
fund performance comes from investing in good companies,
not from day trading. While our trading system mirrors
the real world as closely as possible, investors who prefer
to capture quick gains may find day trading on our system
more difficult than actual online day trading through an
participants may select equities for their funds from those
traded on the New York Stock Exchange (NYSE), American
Stock Exchange (AMEX), and OTC market (NASDAQ) (herein "the
Real Market"). The NYSE, AMEX, NASDAQ and OTC are
open from 9:30 a.m. to 4:00 p.m. ET. After hours trading
will not be permitted. Stock price quotations on the Marketocracy
web site are delayed at least 20 minutes. All trades occur
on the Marketocracy market rather than in the Real Market.
Orders submitted for entry outside of normal trading hours,
9:30 a.m. to 4:00 p.m. ET, will be entered into the appropriate
order book for execution at the opening of the following
trading day. These orders will be subject to communications
delays and availability. Simulated order executions for
fund trades are based on the actual reported trades of
NYSE, AMEX, NASDAQ and OTC stocks, on a share for share
basis, following a minimum 20-minute order delay. Marketocracy
executes all fund orders with at least a 20-minute delay,
subject to other orders in the order book, market conditions,
system performance and other factors.
and limit orders are accepted, as are day and good til
cancelled (GTC) orders. GTC orders will remain active for
14 days, at which point the order will be closed.
orders will be adjusted for stock splits and stock dividends.
Note that since splits and dividends are not credited until
after the market close, it is possible that an order will
execute before the split has been applied. The stock will
be credited to your account when the split is applied.
Other corporate actions (de-listing, mergers, etc.) will
cause an open order to cancel.
orders may be cancelled, but you will receive any shares
that have already filled by the time the cancellation has
been processed. (Practically speaking, this means that
while the market is open, market orders for high volume
stocks are likely to fill before they can be cancelled.)
provide as realistic a simulation as possible, the Marketocracy
trading engine uses live data feeds from the major stock
exchanges, but fills open tickets at a fraction of the
total real market volume. This means that orders for small,
illiquid stocks can take days or even weeks to fill.
balances will be charged a virtual interest charge of Federal
Funds rate plus 3%. The Federal Funds rate is updated monthly,
or upon official change in rates, whichever is first. Interest
is calculated and debited daily.
and acquisitions are processed after market close on their
effective date. Account values may temporarily be misrepresented
until reconciliation occurs. Un-reconciled stocks may be
unavailable for trading.
dividends are paid on the pay date based on the number
of shares owned on the record date.
dividends are paid on the pay date. If the dividend ratio
is greater than 25%, payout will be based on the share
count prior to market open on the pay date. If the dividend
ratio is less than 25%, the payout will be based on the
share count on the day of record.
that there will be variation from the general rules for
splits/acquisitions/dividends, as corporate actions are
executed fund trades will be charged a commission of $0.05/share,
with a maximum commission charge of 5%. All funds will
be charged an annual management fee of 1.95% (195 basis points)
of assets under management. The management fee will be
calculated and debited daily. Sales will be charged an
SEC fee on the proceeds of the sale divided by 30,000.
End of day fantasy cash balances will earn
annual interest based on the Federal Funds Rate, less 2%.
The Federal Funds Rate is updated monthly, or upon official
change in rates, whichever is first. Interest is calculated
and credited daily. All such fees and charges, are, of
course, in fictional dollars.
margin buying or short selling is allowed, as we want to
be able to offer the investing public funds based on our
members' performance, and SEC approval for funds that are
allowed to short is much more difficult. Note that Marketocracy
may expand to allow short selling in the future.
and members using the site understand and agree to the
is subject to change, modification or termination without
notice. The site and its content are subject to conformance
with all applicable laws, rules and regulations.
assumes no responsibility for any computer, online, telephone
or technical malfunctions; or market delays or closings
that may occur. Model portfolios (hereto referred to as "funds")
will be declared made by the authorized account holder
of the email address submitted to us at the time of entry. "Authorized
account holder" is defined as the natural person who
is assigned to an email address by an Internet Access Provider,
online service provider or other organization that is responsible
for assigning email addresses for the domain associated
with the submitted email address.
member of Marketocracy may select his or her own screen
name. By becoming a member of Marketocracy, individuals
agree to have their screen name and fund performance information
displayed on the site where Marketocracy deems appropriate.
Individuals desiring to become fund managers must agree
to be profiled both on and off the site.
Marketocracy reserves the right to change inappropriate or offensive
screen names. Members may not use "Marketocracy" or any other
trademarked item in their fund names or screen names.
reserves the right to disqualify portfolios or suspend
trading in certain securities, or certain types of trades
not specified under the rules, due to fast markets, or
other unusual trading situations and conditions beyond
the control of Marketocracy. While Marketocracy has built
a realistic trading interface, the company does not guarantee
system availability, which may from time to time be impacted
by conditions beyond the control of our computer system
engineers. No corrections or adjustments
for transactions affected by system downtime will be made.
in rankings is at the sole discretion of Marketocracy.
The criteria for rankings may be changed at any time without
notice. Members who fail to abide by Marketocracy's rules,
fail to follow instructions from staff members, or otherwise
engage in behavior that would reflect poorly on the reputation
of Marketocracy may be disqualified from rankings and/or
banned from the site.
Members agree not to make use of material, non-public information in their virtual trades. Marketocracy will perform routine surveillance on the virtual portfolios on the website, and investigate suspicious trading activity. We will disqualify any member whose trades, as a result of our analysis, are deemed to have been made using unethical or illegal methods.
market data is provided for informational purposes
only and is not intended for trading purposes.
Marketocracy shall not be liable for any errors or
delays in content, or for any actions taken in reliance
Inc. and the model portfolios created on its web site are
intended for a member's personal, non-commercial use only.
Model portfolios, trades and results are the property of
Marketocracy, Inc. Members may not copy, modify, transmit,
distribute, display, perform, publish, reproduce, license,
transfer or sell any derivative works, software, products,
reports or services obtained or developed from this site
without written permission from Marketocracy, Inc. Please
note: Some forms of reproduction will require you to pay
a licensing fee.
Model Portfolios cannot be used for any form of gambling.
portfolio methodology and performance tracking audited
by Tait, Weller & Assoc.
of members is not allowed. If a member is found to be soliciting
other members, his/her membership will be terminated.
and all other names, logos, and icons identifying our services
are proprietary service marks of Marketocracy. Unauthorized
use of any material contained on the Site may violate various
laws, regulations and statutes. Patents pending.
where prohibited. All applicable taxes, if any, are the
responsibility of member.
becoming a member, you grant of permission for Marketocracy
to use member's name, likeness, image, portfolio information
and results without additional compensation.
a member or engaging in fund operation is acceptance of
reserves the right to resolve any disputes with or between
members and its decisions shall be final.
Inc. reserves the right to modify these rules or terminate
any program, feature, portfolio, report, fund, site, offering
or analytical tool at any time without prior notice.
you have questions about the rules, please email email@example.com.