BUX: Stock broker and game combined


Many young people consider the stock market as boring, and as ‘mainly for older people’. BUX is a new smartphone application, available in Dutch, English and German, which is aiming to combine investing with a game. BUX believes that the stock market is the biggest and best game in the world. They aim to give access to the stock market for everyone, not just the ‘big boy bankers’.

bux

How is BUX different from traditional stock brokers?

BUX picked a few popular listed companies (including Heineken, Facebook, Twitter, Tesla, etc.). Therefore, it is not possible to invest in any listed company you want, just the ones that were selected by BUX. Also, while using BUX, you do not actually purchase the stocks. The application works with derivatives, which are securities with a price that is dependent on the underlying asset (in this case: the stock)(Investopedia, 2015). You actually sign a ‘contract of difference’ (CFD), which is an arrangement made in a futures contract whereby differences in settlement are made through cash payments, rather than the delivery of physical goods or securities (Investopedia, 2015) with Ayondo Markets, the stock broker BUX works with, for every transaction you make. To summarize: you pick one of the selected companies, estimate if the stock price will rise or fall, and make a profit of loss with your CFD based on the actual stock price.

Stock broker or game app?

After hearing about BUX, I was instantly interested; I wondered if BUX was really about investing. After some research I found out that the answer is rather simple; BUX is more a gambling game than a stock broker. Investing is about making sure that your savings have a better return compared to a savings account at a bank. An extensive risk profile should be made and companies should be evaluated on their fundamentals. BUX on the other side, is about short term ‘investing’, which makes evaluating the fundamentals of the company useless. Therefore, BUX is, in my opinion, more a gambling game than a stock broker.

bux3-1024x599

BUX as a game

Even though BUX cannot be seen as a real stock broker, BUX still has the potential to grow a lot larger. There are many people interested in the stock market and BUX could be an easy way to learn the basics of stock trading. However, commercials by BUX stating that you can play with the ‘big boy bankers’ and get rich are misleading and incorrect. BUX is fun, but only works with small cash amounts and over a short period of time.

Niels van der Wolf

355821nw

Sources

Van der Vliet, H (2014) Hoe ik niet rijk werd van beleggen op mijn telefoon, NRCQ, 03-10-2014, Available at http://www.nrcq.nl/2014/10/03/hoe-ik-niet-rijk-werd-van-beleggen-op-mijn-telefoon, last reviewed on 22-09-2015

Spelier, P. (2014) BUX maakt aandelenhandel toegankelijker en leuker, Emerce Innovatie, 06-10-2014, Available at http://www.emerce.nl/achtergrond/bux-maakt-aandelenhandel-toegankelijker-vooral-leuker, last reviewed at 22-09-2015

Investopedia (2015), Derivative, Available at http://www.investopedia.com/terms/d/derivative.asp, last reviewed at 22-09-2015

Investopedia (2015), CFD, Available at http://www.investopedia.com/terms/c/contractfordifferences.asp, last reviewed at 22-09-2015

Advertisements

2 responses to “BUX: Stock broker and game combined”

  1. yorickvanderiet says :

    Interesting topic!

    Last week I watched the commercial and this made me think about the concept of BUX. I would agree with you that this ´´brokering app´´ isn’t about investing but just a gambling game. When I last checked it is forbidden to advertise for gambling games in the Netherlands. How is it possible that BUX and some other similar ´´brokering apps´´ can continue advertising, without getting fined or stopped ?

  2. hugo says :

    Hi Niels, I am pretty interested in Finance and have already participated in several stock market games before, organized by banks or newspapers (i.e. Handelsblatt). However, I had not heard about Bux before, which is why I thought your article was quite interesting. I ultimately even found out there is more companies like Bux, such as Ivstr or Kapitall.

    I think that our generation – the Millenials – values time much more than previous generations like the baby boomers, which is why Bux has found quite a significant niche. In fact, jobs have to be challenging, varying but most of all, they have to entail a considerable amount of fun. Bux, by representing the stock market as a game where every participant would face a successful outcome, has made a point and thus found its way to compete. What’s more, it seems to provide people like you and me with insight to finance basics and fundamentals, critical for further development in that sector. It even fosters collaboration by encouraging friend users to exchange information about their trades, making the experience way more interactive.

    However, I believe that stock market apps should be as representative as possible and constitute a real reflection of the actual stock exchange. By contrast, apps like Bux keep everything quite easy and basic, even only allow a couple of companies to invest in, which makes it quite hard to apply theories such as risk diversification or other related ones. Further, stocks can only be hold for a limited amount of time, including to compete in so-called head-to-head battles with friend users. Consequently, the app seems to be significantly different from the real stock market, which makes it hard to consider it as a relevant platform, giving you first-hand teaching and insight into investing, which, at the end, is a long, exhausting and most of the times unchallenging process.

    References:

    http://time.com/money/3714370/the-problem-with-stock-market-games-they-arent-boring-enough/

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: