If you have read James Surowiecki's book, "The Wisdom of Crowds", you might be interested in this post (Surowiecki's basic thesis is this: "large groups of people are smarter than an elite few, no matter how brilliant").

Anyway, Forbes has an interesting article on California investor Ken Kam, who has created a
fund, MOFQX, that has more
than doubled the returns of the S&P 500 since it was founded in
November 2001. The article goes into great detail on the beta of the fund, how it works, etc., but I'll boil down the basic gist here:

• Ken created a simulation stock market (marketocracy.com)


• People sign up and trade on that market


• Ken allows the best performers of the group in his simulation market to designate the trades in his real fund, MOFQX


• Ken's real fund is kicking butt.

Backing away from this a bit, it will be interesting to see if prediction and simulation market software takes off. It seems like there could be a need for a generic software platform that could be configured and/or customized by user need. I have heard anecdotally through the Grapevine that for some CIOs who have breathing room away from Sarbanes-Oxley, security, etc., that they may spend some time looking at how to set up various artificial markets to support real business decisions. The information on prediction markets is hard to find though. In a very cursory analysis, I did turn up two interesting sites at NewsFutures and MIT Technology Review's Innovation Futures. Only one of these sites is vendor-related, but at least it does give people a quick flavor of the possibilities.

Steve Shu