Need Some Help Guys

[Ethan]

Hey,

Im very new to stocks etc. I am trying to read as much as I can. I am doing a cool project for school where I am using a stock simulator program. I have about 23 days and $100,000 dollars of play money to try and make the most money i can. I also have to invest in a minimum of 5 different stocks. Any help would be greatly appreciated.

Thanks,

Ethan

[WallStGolfer31]

Hey Ethan,

Although I'm a little buzzed on this wonderful Saturday night/Sunday morning, my advice is still the same.

Back in high school we used an Internet simulator like you did. I started out the year with a very well diversified portfolio in companies I thought would perform well. Well guess what?

I was completely off! The way it was in my class was only the top team got the prize, everyone else, 2nd through last were all losers!

To make the most money in a short amount of time, especially only a few short months/weeks is to just pick the most volatile, the most up and down stock you can find.


Find some penny stocks, one of those stocks that goes up/down 40% a month on average. That's how I won, because in the short term, it's all luck anyways.

-Dann

[Ethan]

Awesome. Thanks for the help. What do you reccomend for an online stock trading account?

Thanks Again,

Ethan

[d2cold]

I would agree with Dann 100%. I have played online stock contests... I won a $3000 laptop using Dann's strategy above by finding the smallest dollar stock amount with high volatility (most contests have minimums like $1.50-$1.00). Try Yahoo or MSN for what your doing to keep track of your account.

DH

[aquaswim47]

I don't think your teacher is really emphasizing a long-term portfolio so pick the most aggressive stock you can find. My CNBC portfolio is only up a measly 12.4%. In the CNBC challenge, I've been mainly a passive investor. I owned BHS, CAT, CBH, CC, CMGI, CTRP, CWTR, GSK, HLT, JBLU, JNJ, NOC, SHLD, TEVA, T, and UTX. My laggards were: BHS, CC, CTRP, HLT, JBLU, JNJ, and UTX. In any event, I'm 4th among the celebrity leaderboard. I hope this indicates the benefits of passive investing over trying to beat or time the market; it is only one more example. Also, it shows that if you're willing to take on more risk, you get may more reward. CMGI was the only stock I followed as a result of a herd mentality; the other 15 were value investment picks. Unfortunately, it was my best performing stock. I feel uncomfortable following the herd; it's simply not my investment style.

I believe creating your own mutual fund of 15-20 stocks is probably a good way to make money as long as you keep your costs low; you may want to invest 85-90% of your money in a Vanguard mutual fund and the rest in your own individual stock portfolio composed of five to ten stocks in different sectors. For instance, every time you get $4,000, you put $3,500 towards Vanguard and $500 for an individual stock. That won't help in your investment game, but it will likely pay off in your long-term investments. I really think the 87.5/12.5 is a great strategy that will, in the long run, pay off. It allows you to have enough in the game whereby you are interested in coming up with your own investment choices yet being able to earn market returns and be sure you won't underperform the market. Index funds are the best way to achieve market returns.

This isn't necessarily exciting but only 18% of mutual fund managers are actually able to reach or exceed the market. You might be one of those 1/5 of the meet or beat the market, but why put 100% of your money at risk if you have an 82% of underperforming the market. In order to beat the market, it helps to minimize trading costs, to read the firm's financial statements and annual reports, and to listen to any conference calls that you can find on Yahoo Finance for the firm. It makes you more likely that you will outperform the market if you follow these rules, but still you have an 82% chance of underperforming the market.

[Ethan]

Hey Guys,

Thanks for the help. It was awesome. I also made $10k with dow jones today with that nice jump! So what do you guys think of jim cramers stock picks on his show mad money?

Ethan

[llamagatekeeper]

Worthless and for the masses for the most part. He is there for entertainment, but the basis for his show is good in nature. Someone correct me if I'm wrong, but isn't there some Cramer effect where his stock picks jump and then drop a certain number of days after his show airs?

[MDZ]

Brett,

I have heard about this as well. I also heard about some investors profiting off of this by shorting the stocks that Cramer pumped. These things would jump, and then fall back down after the hype wore off. I personally do find him interesting though, but I use him more for information, not on what to put my money into.

Mark