Stock Markets Exposed
Help with the Stock Market Game?
We are playing the stock market game in government class. what are some good companies to invest in so i could make some moneyyyy???
Public Comments
- There are a ton of good companies out there. None that I would be going long in (buying). I have addressed this Q several times since last summer 2008. My consistent suggestion has been to stay in cash, CD's, short term US Treasuries, or for the trader - short the S&P 500 Index. This has been the ONLY correct move thus far. Trading, esp in a class game is not going to be accurate as all trades are not really entered in the market, thus not subject to real bids. My answer would be hedged based on when the game ends. No one who has answered this Q ever answered that question. We will have short term "Bear Market Rally's" but these are not times to buy but times to sell, or re-short. So if you are thinking, "well, its a game and were supposed to buy stocks." We'll, my answer is that buying stocks just because is not the reason to buy them. There are times to buy and times to sell. By staying about 100% effective cash and perhaps a bit net short, I have suggested since I have been asked these questions that what will be more likely is that 75% or more of the class who went long and bought stocks will lose the game. I also have said since what - 99 to 100% - of the class has no real market understanding, or experience on how trading/ investing works, therefore I'd expect that the only winners will be those who allow everyone else to make the mistakes and buy stocks long and hope they go up. Therefore, a better strategy in my view using game theory, is not to try to outperform the market, but to be cognitive of who the players are, and all you need to do is outperform them. I'd rather just watch the majority of the people playing the game fail (have net principle loss at the end), thus you come out ahead. There may be a couple people who will get lucky and excel, but I'd go with the odds of the rest of the class losing their principle. Remember the real winners are those who still have their principle in tack at the end of the game.
- Take a look at BCR, GENZ, and ICLR. CR Bard (BCR) just got FDA approval for a vascular stent they have been testing, so that might spur interest. They already make about $4 a share so maybe now they will make more. That tends to cause prices to rise. At $87 with an upward trending slope, hmm, could do worse. Genzyme is another that earns money and has an upwardly sloped price (under $60 in December, over $70 now, not stellar but not shabby either). In the case of ICLR, some rating agencies think very highly of it. Frankly, I think that competitor KNDL is better, but if the press is looking at ICLR then guess which will get more market attention?
- You, nor anyone else, would be able to correctly direct the direction of a particular stock in this market. Neverthless, you can still accrue huge gains by not knowing whether the market will shoot up or drop down. All you must do is predict that the market will remain highly volitile, as it has done. Simply, wait for a relative lull in the market and purchase VIX (Volitility Index). Quickly, this stock will rise dramitically as it has done today. (Up 15%).
