Stock market game. any good stocks to buy in a short period of time?
ok were playing this stock market game in economics and i was wondering what are some good stock to invest in. you start off with 0,000. you have to buy at least 100 shares. if there are any goods stock that you will think will shoot up with in the next 3 weeks. so far we have bought apple and gold stocks, so if you have any good ideas let me know thanks. i have 3 weeks to beat my class mates 
thanks for the help
its virtual money and should i what strategy should i use? should i buy long term or high risk stocks? should i wake up early to buy?
i also have to diversified my stocks buy some different kinds but i still want to be on top
i think its 5 dollars commision or 3 every time i buy a stock
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September 22nd, 2010 at 3:31 am
You have to remember that cash is an investment too.
How many people lamented not having any money to take advantage of the bargain prices after the price collapse in 2008? Yet people like Warren Buffet were able to immediately scoop up bargains left and right, how is it that if they are such great investors that they had uninvested money to purchase stocks with. Well, that’s because they also invested in cash and were just rebalancing their portfolios to bring the percentage of cash back to where their targets were.
At MIT, Claude Shannon once gave a lecture where he mathematically proved that if you kept half your portfolio in cash, the other half in a stock, and when the stocks went up, you sold stocks to return to the 50/50 position and when it went down, you bought stocks to return to the 50/50 position that you would always make money unless the stock just disappeared. The consequence was that you bought low and sold high.
As to the exact proportion of cash to stocks? Well an optimal proportion can be calculated by taking the first derivative of the log utility of wealth to maximize that utility. It’s an engineering equation called the Kelly Criterion and was postulated at Bell Labs by John Kelly based upon Claude Shannon’s Information Theory equations. The equations are used to optimize data transmissions such as over the Internet. However, the equation is a simplification to a binary outcome and requires an estimate of probabilities and net profit. Suffice it to say that there is a proportion of the portfolio that should be kept as cash for optimal growth and that it’s better to have more cash then less.
Many people would equate bonds to cash so they would just keep a fixed portion of their portfolio in bonds.
The next three weeks takes us into October, a fairly volatile time of the year for the stock market. If the game doesn’t involve commission costs (it would be unfair to do so in such a short time frame) then I would just keep 60% in a S&P 500 ETF fund to leverage the index instead of trying to pick individual companies and put the remaining 40% in either cash or bonds then I would rebalance daily, buying or selling to return to the 60/40 position. You may want to keep the 40% as 20% cash and 20% bonds. If you want to be aggressive, increase the 60% perhaps to 70% or 80% but keep in mind that then you’re exposing yourself to downturns in the market and October tends to be the month that downturns occur.
September 22nd, 2010 at 3:31 am
go with high and lowstocks
September 22nd, 2010 at 3:31 am
SELL APPLE NOW it doesnt go up at all, buy MIPS and ARMH, they make processors and are both going up a CRAP LOAD in the short run. You will probably make the most in your class.