Final Words
Participating in “The
Stock Market Game” was a very interesting experience as it helped me to finally
understand how the stock market works. I learned that investing in stocks is a
very tedious and time consuming job. It requires extensive research and it calls
for a risk-taker personality. One cannot simply purchase stocks from a company
because they think it is a trending brand name. From my experience, I learned
that investing can lead you to discover thousands of companies that many people
have not heard about yet but that show potential for future growth. I also
gained that in order to make maximum profits, an investor must watch the stock
all day long in order to sell it at its peak price before it starts crashing. This
leads me to say that as every stock might increase in price, it will eventually
crash. Although each “crash” varies and some may be drastic while others minor,
short time selling as my group and I experienced exhibits a lot of ups and
downs. Overall, I have learned how to differentiate between investor worthy
stocks and how to determine if a stock is worth the investment.
At the beginning of our journey we hoped to earn $20,000
to use for our college tuition. However, our goal was not achieved due to a
number of factors. First of all, finding stocks to buy in the short-run is very
difficult and requires a lot of research. Many stocks are good to buy in the
long-run to invest over several years or possibly over a lifetime. Second of
all, no one knows how the market will do the next day. Even if a stock seems to
be sky-rocketing in value it may at any minute crash without notice. Third of
all, “The Stock Market Game” does not reflect how the stock market works in the
real-world. Purchases made, let’s say on Tuesday will only be processed the next
day which would be Wednesday and the same applies when stocks are sold. In the
real world, when a stock is purchased, the purchase is processed right away.
Hence, this led to a lot of confusion as we could not fully understand how to
make sure that if we a buy a stock today it won’t crash tomorrow. As a result,
even though we did not reach our goal, we did make a decent amount of money
from several stocks.
I do not plan to invest in the market in the future
because I simply would not want to risk my earnings to be disappointed by huge
losses. In addition, since investing requires a lot of time and dedication I do
not think that I would be able to commit to such a task as I have many other
interests. Yes, it would be absolutely amazing to earn millions as we hear from
many investor stories. However, I do not think that investing is something that
I could undertake.
To someone who is new to The Stock Market Game, I would
primarily advise him or her to conduct research on every stock before deciding
to invest in it. Research, I believe, is the most important factor in
successful investing. In addition, I would also advise him/her to understand
all the different terms concerning each stock such as the P/E ratio, Trailing
P/E, Forward P/E, PEG ratio, Book value, etc. These terms are really helpful when
making a decision whether you should buy a stock. Lastly, I would advise
him/her to try investing in a variety of companies in which some may deal with
technology, others with vacation resorts, while others in material goods. Overall,
I wish them luck!
~Ruta
While
playing The Stock Market Game, I have learned much about the actual stock
market, the trends that often occur, and the extensive research that one needs
to do when investing in a stock. For instance, one of the main aspects of the
stock market that I have learned is that it is an absolute necessity not only to
know how well the stock has been doing recently, but whether it has a history
of declining sharply, increasing sharply, or remaining constant. This will
essentially help investors take note of whether they will be making the amount
of money they intend to earn while investing and if they think it will be more
efficient to take risks or, rather, “play it safe”. Additionally, I have learned
that one must always be up to date with recent articles on the company or
product they are investing in, which usually discusses negative press such as
NSA spying with AT&T phones, or positive press such as the film “Frozen”
being the highest grossing film for the Walt Disney company. I feel that this
is the most essential part of investing in the stock market because knowing why
a stock is doing well, or doing poorly is just as important as the actual
profit earned, in order for one to predict whether they should continue
investing in that stock, buy more shares, or just sell the stock altogether.
Initially,
going into the game, we wanted to make about $20,000 for college tuition as
quickly as possible. Therefore, our team’s goals were to buy cheap stocks, and
not take the risky route, which we managed to do by investing in mainly
technological companies that are usually always consistent and always produce
innovative products that are in high demand. However, despite buying several
stocks that were profiting well, and doing a lot of research, we did not reach
our goal, simply because the stock market is very unpredictable, even if the
stocks you are investing in are relatively consistent. In fact, there would be days,
in which all of our stock prices would drop drastically and we’d lose a lot of
money. We have even had to sell certain stocks upon realizing that we would be
losing more money than earning, if we were to keep them. Furthermore, despite
being an informative game, due to the stock market’s unpredictable nature, I do
not see myself investing in the market in the future.
I feel
that unless one has a stockbroker to manage their stocks and research current
market trends for them, investing in a stock can be a very grueling process.
Similar to the game, an investor may experience great losses, however, these
losses will have an actual financial consequence if an investor does not know
the tricks or strategies needed in order to make a profit in the market, such
as short-selling. Although I do believe that some people will be able to end up
very profitable from the stock market and will probably earn enough to buy a
new car, or home, or pay off their student loans; there is simply too much risk
in investing your money in something that can never truly be a sure thing.
My main
advice to a newcomer in the SMG game is that simply because a product or
company is currently popular in the media, or is well known, does not mean you
should invest in it. Often times, those stocks tend to be the quite inconsistent
and will drop immensely, for example, Facebook or Twitter. Finding the best, or
most efficient stocks that will achieve your goals takes a large amount of
research and you need to be willing to invest in corporations that are not
necessarily highly advertised, or popular in the media. Like I have mentioned
previously, the corporations that are most in demand involve technology,
manufacturing, or energy resources. As an investor, one needs to be open to a
variety of options for the best outcome.
~Joel
The
main advice that I can give newcomers to the game is to be as flexible as
possible, since the stock market is constantly changing. Even though I think
that it is very important to have a general strategy, the situation may call
for the strategy to be broken, and to react accordingly. For this reason, a
good idea is to have a schedule for the group members to check the stocks. That
way, the stocks are always being looked at, so if a certain stock either goes rapidly
up or down, the group as a whole will be able to handle the situation
appropriately. That being said, cooperation is very important, because members
need to find a way to communicate their ideas and intents, because everyone may
not always agree with purchasing a stock, or selling a different one.
Participating in the Stock Market Game
was a very informative experience, and a rather close simulation to purchasing
and selling stocks in the real world. In every aspect it was excellent
preparation for our future, as we were as a group given a large sum of money,
with the ultimate goal to make more money that we started off with. For me
personally, it exemplified the instability of the stock market, since there was
no way to know for sure whether the price of a stock would go up or down. Many
stocks that we thought would do well ultimately ended up making us lose money,
and vice versa. I also learned that before buying a stock, or selling one, it
is very important to read about the surrounding information regarding that
stock, and how the company is doing outside of stocks, as very often one
affects the other. Another important thing to look for when buying a stock is
the indicators, for example yearly high and yearly low, as they will help
extrapolate how the stock will do the rest of the year.
Our goals for the SMG
were to end up with a profit of 20,000 dollars, but despite our research and
hopeful predictions we were not able to meet that goal. Even though we
attempted to extrapolate the data given by the stock tickers, because of the
fact that the stock market is so unreliable and fickle, our predictions were
not always accurate. In addition, we should have made a little more risky
transactions, because those transactions though risky usually have a more
significant profit in the end. However, in the end there were points where we
were able to make more money that we started with, and that is good experience
for all our expenditures in the future.
Based on my experiences with the SMG, I
will most likely invest in the stock market when I have the opportunity to
later in my adult life. More specifically a stock that is in the blue chip
market, as they are very reliable and after a long time can produce a large
profit. Most of them are relatively cheap, and very rarely cause financial
dilemmas. One of these stocks include WalMart, which has been increasing in
price steadily since the 1980’s, which is why the earlier you buy a blue chip
stock, and the longer you keep it before selling, the larger the investment and
end profit is. If I do decide to invest in the stock market, my strategy will
reflect the plans that our group had during the SMG. I intend to purchase safe
stocks, and make long term investments, to ensure that the probability of
making a profit is as high as possible.
The
main advice that I can give newcomers to the game is to be as flexible as
possible, since the stock market is constantly changing. Even though I think
that it is very important to have a general strategy, the situation may call
for the strategy to be broken, and to react accordingly. For this reason, a
good idea is to have a schedule for the group members to check the stocks. That
way, the stocks are always being looked at, so if a certain stock either goes rapidly
up or down, the group as a whole will be able to handle the situation
appropriately. That being said, cooperation is very important, because members
need to find a way to communicate their ideas and intents, because everyone may
not always agree with purchasing a stock, or selling a different one.
~Vlad
