SMG Assignment #5

            For the better part of my time in Econ, we played the stock market game. It’s essentially a free game that allows members to practice trading in a lifelike brokerage simulation.  By participating in the community, you can learn the ins and outs of Wall Street by investing virtual money.  This virtual stock market game features real-time trading simulation and multiple contests. Beginning investors can practice stock market trading, compete with friends and investors, In doing all of this, especially with a school like LMG where the kids could really competitive, this was about the only part of school I can remember having fun and learning at the same time. A couple of points that you learn fairly fast were:

 1) If you are going to try to win the contest then you need to swing for the fences and hope for the best since you have nothing to lose (since it is not real money). This is not a way to learn how to invest your portfolio.

 2) If you are doing short-term trading strategies then these kind of sites can be useful to see if your strategies work. Unfortunately for long term buy-and-hold investors - these sites are really only good for learning about actual orders (for example: buying with a limit).

3) History repeats itself on Wall Street

One of my groups biggest things we got to take away from this is we learned, after our failing first week, not to invest in mediocre companies just because we like the product personally.  It is by no means impossible to make a fair one-time profit from companies with a stationary or even a declining sales curve. Operating economies resulting from better control of costs can at times create enough improvement in net income to produce an increase in the market price of a company's shares. This sort of one-time profit is eagerly sought by many speculators and bargain hunters. It does not offer the degree of opportunity, however, that should interest those desiring to make the greatest possible gains from their investment funds.

            In conclusion this game could be fun or played serious. When you consult with your group to make these decisions with your money it makes you feel like a grownup addressing his peers as weird as it sounds. This assignment was one of the more empowering ones that gave us the choice making abilities. Some groups chose to listen to Mr Ryan and invest smartly and almost doubled their money for it. While other groups invested without any thinking and lost almost all of their money. Either way we learned a lot about the big scary world out there called wall street and this defiantly better prepared us for it.

Stock Assignment #5

Kayla Ashe May 9, 2015

Economics Assignment #5 (Stock Market Game) B-band

For economic my group members, Takia, Libby and Raliek and I were assigned to play a game called The Stock Market Game. The Stock Market Game is a game that is mostly been played for students and the purpose of it is to to become an investor. You can kind of say it was life we stockbrokers like in Wolf of Wall Street, (well kinda of) and our main goal was to make a lot money off of the stocks we purchased.  This experience of playing the game taught me a few things that I did not know before actually playing this.

Let me first say that I plan on not doing anything related to finance in my future. To be honest, my first reaction to this assignment was that do we really have to do? I’m not going to learn anything from this boring assignment so why do we all have to do it?  Well then so of course I could not do anything about it so Takia, Libby, Raliek and I teamed up together and were discussing what our industry.  Basically we had a budget of $100,000 to spent for buying stocks. I would say it was one of the hardest parts of this assignment especially since we had all different opinions of what we wanted to invest in. We came up with multiple ideas such as focusing on food companies, clothing stores, phone companies, etc. We narrowed it down to buying T-mobile (phone company), Sony (home appliances) and Vodafone (phone company) we wanted to mainly focus on technology in the beginning. We thought technology was a good start because now a days people tend to want to have the latest things such as a new cell phone, new computer or even a bigger television, etc. When we were buying the stocks, we decided to try to spent our money wisely and only buy a few stocks as our plan to decide where to go with how we were deciding to gain more money. Days later, we saw the progress that we which in fact we were gaining money and all of our stocks were increasing. So we decided that even though we were doing good with our stocks, we knew that we should jump too far into it and buy numerous amount of stocks so we looked up stocks were popular but were also cheap to buy. So we purchased 3 more stocks, which were Guess, Urban Outfitters and American Eagle Outfitters. We decided that we should keep continuing with being in the technology industry, so we wanted go towards the clothing industry. However we wanted to do research before doing anything that can cause us regret our decision and we lose money as our result. Days later, we saw that we lost money due to the fact that Vodafone was decreasing in stocks so we decided to sell that as an opportunity cost for us to try to gain back the money we lost.  So we frequently checked on our progress and saw that we were doing better and was gaining back the lost we had slowly. So we decided to buy more stocks such as Netflix and Apple, we knew that it was risky but we we thought that we can try to gain extra money.

Overall we were proud of how we were doing with our stocks and we thought that this experience was helpful especially since I learned how to be wise with my money even though I would not be pursuing it as a career, I know it would help me with spending my money to things that can benefit me in the long run. So now I see the benefits of playing this and it changed my opinion. I would also recommend this game to other people who are around my age range so they can know that money is something to be very serious about and to have a good strategy when dealing with it.  

The group began with a budget of 100,000 and we decided not to touch the money for a week so we can really plan out how we were going to use the money wisely. As a result, our total equity increased trivially due to interest . When we began to invest in stocks, we only investing 10 shares into companies that cost fifty dollars and below using this method we stayed steady in the market. Then, we decided to invest more money into a popular and expensive stock which caused our total equity to decrease because we invested a huge portion of our money into the company and the stock kept decreasing.

-Takia G., Kayla A., Libby S. & Raliek G.