Any stock market guru's here? (1 Viewer)

[Tony_Woods]

For one of my finance classes we get $100,000USD play money to invest in the stock market. I don't know where to start. Last time we did it I just invested in all the companies in my computer, AMD, Nvidia, Microsoft, etc and I got smoked lol. So far I have just invested in Rambus (RMBS) and I've made about 4k out of it. Any recommendations?

 

[Scott Merryfield]

Buy low, sell high.

 

[Brian Perry]

Do you have to spend all $100k on stocks or can you leave some in cash? It may be better to go light on stocks if you think the market is headed down.

If you need to pick some stocks, I would go with:

MO (Philip Morris/Altria)
JNJ (Johnson & Johnson)
CSCO (Cisco Systems)

If you can short stocks or buy put options, I would look at:

EBAY (eBay)
various gold mining stocks or mutual funds

Just my $0.02, which is what I have left from $100k in my 401k (just kidding).

 

[Michael Reuben]

Stock market gurus? Just come to any unemployment office in New York City and toss a coin. It'll land on one.

M.

 

[Ashley Seymour]

How long is the class? If for a semester then you have a different challenge than if you had to invest this amount in real life.

I played the stock market games on the computer a couple of years ago, but can't find a fun one at the moment. They were set up for one month so they attracted the day trader mentality. This is probably good as in your class you are not risking your own money and can find out how hard it is to really make moneh.

You have made $4K which equates to a 4% annual rate. If you did nothing more than sell out now and keep the money in cash then your would have a good return. The stock market does not look too good for the short or long haul.

Learn about short selling and especially puts and calls. In my fantasy trading I had a month with a 67% gain made mostly by shorting some of the .com stocks, but because the market rallies and dives, a couple of other months I lost 30%.

For the short term do some research on technical analysis.

My son just went to work for Micron and is excited because they will partially match his investment. He thinks it has no where to go but up. At the time of hire it was at $8.60 (last month) and now has move all the way to $7.62. Could be a good short candidate for a month.

There are lots of short candidates on the markets now.

 

[Erich_S]

One piece of general advice I can give is to use the play money to experiment with some things that you'd never do with your own money. You'll probably buy stocks with your own money someday and it wouldn't hurt to do a little with your funny money to keep from going "bankrupt"

I can't give any specific advice, but when my wife went through this game in a finance class, she followed some advice her dad gave and ended up with around a million dollars based on Yen futures bought on margin, something she never would have tried with "real" money. Sure, the reward that time was big, but I'm sure if we ever tried with our own money, we'd end up losing our house.

You might end up "virtually" flat broke, but at least you'll get to experience the highs and lows of some of the riskier and more obscure ways to lose and make money through investing.

Erich

 

[JoshF]

Too bad you can't collect dividends on preferred stocks in your fantasy game, as that would be the way to go right now. I earn around 8-9% on some preferreds, and they hold their stock value, even in this market.

 

[Danny R]

One piece of general advice I can give is to use the play money to experiment with some things that you'd never do with your own money.

The best way to win in such games (have the most money at the end) is to invest in penny stocks who's prices fluctuate wildly. For instance K-Mart, who is in bankruptcy right now, traded from 0.03 to .27 in the past 3 months, proving the opportunity for 900% returns. Of course this could also be the recipe for losing as well, as you can never tell with penny stocks which way they will bounce.

I'd never invest in such stocks with real money though.

 

[Scott Merryfield]

CSCO (Cisco Systems)

Speaking as a longtime Cisco stockholder, their stock price has been very flat for the past year or so (after taking a huge tumble when the rest of the technology sector).

 

[Dom P.]

If you really want to win the contest, the ONLY thing to do is dump the full $100k into something very aggresive and hope it goes quickly.. obviously this would not be true investment advice, but to win the contest, it's a great way to go.

 

[Tony_Woods]

Yeah, I thought about the penny stocks, but the thing is I have to turn in an evaluation of my portfolio every week. I can't expect to get a good grade if I say "well, since it's not real money I decided to see if I could get rich over night"
Instead I have to present valid arguements and formula analysis as to why I chose one stock over another, etc.

 

[Glenn Overholt]

I take it that you'll have to pull everything out in May for your final, so what you need to look at are stocks that will grow between now and then.

Spring is coming, and that means new clothes, so clothing manufacturers will win here, along with patio furniture, lawn chairs, barbeque equipment, swimming pools and lawn mowers. You get the idea.

Your other short term growth option is to look at the world today. I know this is nasty and I am almost treading on dangerous ground here (so don't pick on my choices), but the bomb makers, and the crews that repair out of control oil wells would be a good investment.

Glenn