Akylbek Apaitov and Andrew Marcus on how to beat the S&P500 with a user-friendly interface
Disclaimer: the facts presented in this article are not investment advice. Seek a licensed professional for investment advice.
In a rapidly evolving world of stock investing, innovative platforms are emerging to meet the growing demand from retail investors. One such platform making waves in the United States is Kappa: Stock Screener. Akylbek Apaitov and Andrew Marcus have combined their expertise to change the way ordinary people invest in stocks. With a small application for iOS and Android they are making sophisticated stock investment methods from Wall Street available for everyone with a few taps. In this exclusive interview, we delve into the minds behind Kappa and explore why they chose to launch the platform in the USA.
Good morning, Akylbek and Andrew. Thank you for joining us today.
Akylbek Apaitov: Thank you for having us. We're excited to be here.
Andrew Marcus: It's our pleasure.
Let's start by discussing the general concept behind Kappa: Stock Screener. We have dozens of apps for stock investors. How is Kappa different?
Andrew Marcus: We have two types of platforms for investors. Both of them leave users to their fate. On one hand, the most popular and well-designed apps basically stimulate users to trade stock using signals and technical analysis. At the same time, professional tools provide dozens of filters which are hard to puzzle out even for an expert.
Akylbek Apaitov: Our goal was to unveil the "secret knowledge" of investing techniques that are used in large investment funds on Wall Street. I would draw a parallel with computers. Fifty years ago they were big machines operated by technicians. Now everybody has a computer in their pocket and uses it with their fingers. The same with investments. It is time to make it available for everyone.
But investing can be risky! Do you manage those risks or leave it up to your customers?
Andrew Marcus: Kappa doesn't offer easy money. We follow a scientific approach, and preach fundamental, long-term investments. My colleague and I are huge fans of Nassim Taleb and his vision of the general unpredictability of the stock market.
Akylbek Apaitov: And Warren Buffett, who advocates simply investing in the S&P 500 index and waiting while it outperforms 90% of investors.
So if you agree with him, how can Kappa outperform the market?
Andrew Marcus: First let me explain how the market, or S&P500 works and why it is so "almighty" that nobody can compete with it. This index is simply 500 largest companies in the US weighted by their capitalization. The index is rebalanced every year by the same rule. It is blind! Investors are not. They invest in emotions, selecting the companies they do or don't like. This is why they fail to beat the simple algorithm.
Akylbek Apaitov: The idea is to create your own index. Let's take the same S&P500 and simply filter out all overvalued stocks and unprofitable companies from it. We can select 50 most financially stable and prospective stocks and rebalance the portfolio each year. Just like the index does. This technique by default would outperform the market.
This... sounds logical. Is it a pure theory or have you checked it in practice?
Akylbek Apaitov: Yes, we have. The algorithm is backed up with 50 years of statistics of the US market. This is called back-testing. Once the algorithm is ready, we simply feed it the historical prices and imitate buying and selling stocks for a long period of time.
What are the results? We all can become billionaires with your app?
Andrew Marcus: Yes, if you invest a few millions and wait for 30 years... As I said, Kappa is not about easy money. It is about long-term investment. Following the algorithm you can expect a compound annual growth rate from 16%, depending on how risky you are. Investing in S&P500, you can have up to 11.2% annually, according to our statistics for over 50 years.
The difference doesn't sound much. Why does it matter?
Akylbek Apaitov: Compound interest, of course! Let's say you initially invest $10,000 and top up your portfolio with $1,000 monthly. Investing in S&P500 with 11.2% in 30 years will make you $2,723,332.84. Investing under 16% will make it $7,222,239.54 - more than triple!
Now I see this is what Warren Buffett and other whales tell us. Alright, let's take a look at Kappa. I see you worked a lot on the design. These tables are pretty compact and neat. Who was the designer, and who developed the app?
Andrew Marcus: Everything was on me. I am the designer and the developer, a "unicorn" like they say.
Akylbek Apaitov: Andrew has done a lot of work. Indeed, he is a unique and talented professional. It's a great fortune that we know him. The project has reached a level of maturity when it's time to take the next step. As an expert in the field of business development and digital marketing, I believe we have high chances for success. It's a top-notch product that surpasses its analogs. I've prepared a digital strategy for attracting a large number of paying users. We're aiming to grow without external funding at the first stage. However, venture investments would help to rapidly scale the project.
Fantastic. What are your backgrounds, guys? Is this your first startup?
Andrew Marcus: Not at all. My first one I launched in 2012, it was called City Courier, a service for same-day delivery with geolocation. Then I had a design studio that was scored as one of the best in the country's ratings. Even now I have another startup, and EdTech platform Talbica. I haven't monetized it yet, but it has won several international awards for its brilliant design.
Akylbek Apaitov: I'm a member of the Marketer Guild with international experience, and worked in different countries. I have experience in managing media and consulting businesses, and over the past few years I have completely immersed myself in the startup ecosystem, playing a key role in stimulating income growth to ensure self-sufficiency and sustainability. Previously, I was busy developing a direction of customer data platform in Clever Data, a big data startup. Before that I worked with BabyBlog, a startup for mothers, where I developed a monetization strategy and helped esteemed brands to build communications with their customers.
Sounds great! Thank you both for sharing your thoughts and this awesome interview. I wish you success with your startup!
Akylbek Apaitov: Thank you for having us. It was a pleasure speaking with you.
Andrew Marcus: Thank you. We appreciate the opportunity to discuss our vision.
