Stock Market Contest [School project]

[instant_ramen]

Hi,

I have an English project (10th grade) for which I will need to buy shares (with fake money). We have ~ 10 200 $ (fake money) to invest. We were told by our teacher to write down the company name, ticker symbol, price per share (at closing), number of shares bought and the total amount paid for the stock on a paper and give it back to him by November 24.

We also have to pay 50$ commission/per company.

I have 3 days to buy (Friday, Saturday and Sunday, before the market open again on Monday).

By the month of may, the teacher will see who made a lot of profit with his investment and declare a winner. Now, I seriously don't know where to invest because of the ups and down in the market.

By the way we were told to select stocks trading on the U.S. markets only (NASDAQ or NYSE).

Any tips? I really want to win this competition lol.

 

[glondor]

I have always liked Investors business daily for U.S. stock information. Their stock picking method using canslim seems to work well for them
http://www.investors.com/

 

[instant_ramen]

Thanks glondor!

 

[Jimmy Snyder]

I think these kinds of mental stock purchases are an excellent idea. That way, if the market goes down, you don't lose any money. You just lose your mind.

 

[tribdog]

I won this contest in my economics class in high school. I bought warrants. This was back when stock prices were in fractions. I paid 1/16 of a dollar and sold at 1/8, bought again at 1/16 and sold at 1/8. Nobody came close to me. It wouldn't work in the real market, but it fooled my teacher.

 

[instant_ramen]

Well, It'll be useful if any of you can mention which company/industry will be able to sustain itself for about 7 months (until may). Is there any economics teacher or student lurking around PF?

 

[binzing]

I'm a fellow sophomore econ. student...lol

We're playing a similar game, stockmarketgame.com to be exact, which also uses closing prices, (which are STUPID...). Another game i was shown a few years back was virtualstockexchange.com which uses realtime prices, which is cool.

 

[Math Jeans]

In my opinion (if this is allowed in your class), I think your best bet would be to go for options.

The volitility of the market gets you great pay-offs on calls even when the call-out value is over the extra payed through tax on your purchases. Basically, its guarenteed profit unless your company goes bankrupt.

 

[LowlyPion]

If you can play options, then you can get greater leverage. For instance Citibank (NYSE:C) shares Mar 09 2.50 strike Call, with earnings report in January looks like a good bet. Last traded 2.16 and current Price of underlying stock is 3.77. Figure the run up after the inauguration, a new year, and well into 1st quarter would make it a promising bet with play money. But it is a total gamble. The symbol for the option is CCY.X It will trade up on Monday most likely as after hours on C was already at $4.10.

Come March if it trades at $3.77 like today, you will make an automatic 70+% profit. Now I wouldn't put real money on this, because there is real risk, and Citi has underperformed to say the least, but if you want to play to win, something like that could pop as the current crisis passes. If it returns to say $10+ by then you will be looking at 500% gains.

Outside of a game let me say that this example is a total gamble for illustration purposes only, and I would be loathe to think anyone would take a flyer on something like this with real money. The reason I chose this is there is decent volume in the options. And it is way depressed.

 

[russ_watters]

Citibank would be my bet too, for 6 months to a year from today.

 

[Proton Soup]

since it's not real money, i'd go for a Hail Mary pass, say something like GM. no one expects citibank to fail, they're already getting government assistance, so maybe.

 

[Gokul43201]

Hi,

I have an English project (10th grade) for which I will need to buy shares (with fake money).
...
Any tips?

Your own username might be a pretty solid buy. Or if you want to diversify, look for Mutual Funds with names like the poster just above me.

 

[BobG]

since it's not real money, i'd go for a Hail Mary pass, say something like GM. no one expects citibank to fail, they're already getting government assistance, so maybe.

Proton Soup has a valid point if your goal is to be the winner.

A stock market game like this is a little unrealistic since the smart investments will wind up above average, but still somewhere around the middle of the pack. The riskier investments will dominate both the top of the ranks and the bottom of the ranks with most winding up at the bottom of the ranks.

You have to decide if you want to be reasonably sure of doing well or if you're willing to risk finishing at the bottom for a chance to win (with finishing at the bottom being most likely).

We had the same problem with a football pool I played in. The beginning of the first season, I always finished in the top 5, but never won. Eventually, I had to revise my strategy and always won at least once per season and won three times one season - I also had a lot more weeks where I looked like a complete idiot.

 

[cronxeh]

I'd say.. $3000 to UYG, $3000 to ROM, $3000 to RXL

A financial, a technology, and healthcare. The 3 ETFs that I can safely say will be higher in May than they are today. A bit more speculative play and higher return and a lot higher risk would be FAS, ERX, BGU,TNA

 

[instant_ramen]

I'd say.. $3000 to UYG, $3000 to ROM, $3000 to RXL

A financial, a technology, and healthcare. The 3 ETFs that I can safely say will be higher in May than they are today. A bit more speculative play and higher return and a lot higher risk would be FAS, ERX, BGU,TNA

Um, how about companies like Campbell Soup, Kraft foods and Kellogg?

 

[glondor]

Hmmm do you think the oil speculators are going to avoid the market for 7 months? Opec already agreed they were to cut production to boost the price of oil back to a c-note per barrell. They like it there and big domestic oil likes it there as it makes the tar sands profitable. I say look for a 40% jump in oil over winter and look for a way to profit off of that move. Those big money boys are not going to sit on the sidelines after January, New year, new profits to steal.

 

[cronxeh]

Um, how about companies like Campbell Soup, Kraft foods and Kellogg?

My humble opinion is.. anyone who invests in those is pathetic

(reason being that those companies go between 30-40 dollars a share over a year, which is 30% gain for entire year if bought at 52wk low. I averaged 30% gain in a week for last 2 months)

 

[instant_ramen]

Ok, so basically investing for Campbell, Kraft and Kellogg = less profit? I think I should aim the food/beverage industry...its safer, don't you think?

I have a friend who decided to invest 5000$ to buy shares from Kraft Foods inc. and another 5000$ for Kellogg. Any predictions on what kind of results (profits) he can expect by may?

 

[cronxeh]

Ok, so basically investing for Campbell, Kraft and Kellogg = less profit? I think I should aim the food/beverage industry...its safer, don't you think?

I have a friend who decided to invest 5000$ to buy shares from Kraft Foods inc. and another 5000$ for Kellogg. Any predictions on what kind of results (profits) he can expect by may?

He can expects a loss in first 3 months, maybe 20%. And then maybe he will get back to the initial investment point in last 3 months. His net gain will be 0.

In this market the stocks have nothing to do with the companies. They are traded like commodities. People who sought safe haven from the meltdown gone to either bonds or higher yielding stocks like Kraft Foods, Campbel Soup, etc. As the meltdown continues into January and February, people will have no choice but to sell their positions to raise capital. All those 401k's that have lost 30-50% of their values now only have aforementioned stocks to sell and they will dump them to meet ends meet. I think the market will rally on inauguration day, maybe a few times between now and then depending who Obama will appoint to SEC position. If he doesn't talk about short sellers and stricter regulation then you will see a lot of investors walk/run away until something changes -> SELL SELL SELL between now and January/February. Maybe dow will hit 6000. Maybe 6500. I don't know but I do know that being short is a good idea but not over 6 months, just 3 months.

By the way all those 'analysts' that talk about how this bear market looks like the 1980's don't realize that back in the 80's there were fewer people and fewer technological advances not to mention its a lot cheaper to trade stocks and a lot more people can do it from their homes. This is still a consequence of the .com boom in 2000's + the stupidity of G.W. Bush and 14 million Americans who live beyond their means (oh and those people who voted for him twice are the reason this country doesn't grow as fast and as much as other countries)

 

[instant_ramen]

He can expects a loss in first 3 months, maybe 20%. And then maybe he will get back to the initial investment point in last 3 months. His net gain will be 0.

! Wow.

By the way, I came up with the following companies, they seem to be doing very well.

- Capella Education Co (CPLA )
- Axsys Technologies Inc (AXYS )
- Calif Water Svcs Grp Hld (CWT )

Or, should I simply stick to your advice:

"I'd say.. $3000 to UYG, $3000 to ROM, $3000 to RXL"

BTW thanks a lot for helping me! (and to everyone else, of course)

 

[cronxeh]

! Wow.

By the way, I came up with the following companies, they seem to be doing very well.

- Capella Education Co (CPLA )
- Axsys Technologies Inc (AXYS )
- Calif Water Svcs Grp Hld (CWT )

Or, should I simply stick to your advice:

"I'd say.. $3000 to UYG, $3000 to ROM, $3000 to RXL"

BTW thanks a lot for helping me! (and to everyone else, of course)

CPLA.. I like their September Balance sheet, the current ratio is good, the debt almost none. The P/E ratio is a bit too high, considering not a lot of people will have the money to attend this school. 930 dollars for undergraduate level 3 credit course is way too high. People will consider going to school/grad school but they will not be able to take out a loan like they used to. That P/E to me means the company is not worth 52 dollars a share, maybe 34-36. The fact that they don't pay divident makes it a worthless stock to me. They've only been around since April 2007. Their earnings have been good up to now, but looking into the future I won't be surprised if their profits drop.

AXYS looks good, been around for a while, solid profits, could be an interesting Obama play with his desire to have unmanned aerial assault machines or whatever he was talking about last year. P/E is a bit too high. Its at 61/share. Maybe at 55/share its worth looking into

CWT. Low yield. Unsteady profits. Its a crappy stock.

 

[mheslep]

... (oh and those people who voted for him twice are the reason this country doesn't grow as fast and as much as other countries)

What policies are responsible for this supposed lower growth?

 

[mheslep]

... The fact that they don't pay divident makes it a worthless stock to me...

Care to share your reasoning for that position, given the http://en.wikipedia.org/wiki/Modigliani-Miller_theorem" that the dividend has no impact on the firms value?

 

[cronxeh]

Care to share your reasoning for that position, given the http://en.wikipedia.org/wiki/Modigliani-Miller_theorem" that the dividend has no impact on the firms value?

Ok that theorem sounds like a crackpot theory to me, but whatever. I think a theorem with that many assumptions is just a constraint optimization problem with no real world applications. Given that the chances of a corporation going out of business (meaning that the powers to be are stupid enough to say 'well we had a good run so far, made a lot of money, its time to sell everything off') and that this company's debt was far lower than their assets, the proceeds of such liquidation would go to the shareholders. It is unlikely that the company would liquidate. What is more likely is that they will keep borrowing more money to stay in business, and ultimately drag the inevitable. Or someday they will start paying a dividend making them a worthy stock. Hey if greed is a better stock than self constraint, why go for stock if bonds are first to get a cut from liquidation?

For a more reasonable investor it would be easier to think of a stock as a CD. You buy a stock that is likely to go higher in value and on top of that pays a dividend. As you wait for the value to increase you also get a dividend, reducing the cost of original investment. In the long run you would increase your initial investment than over the investment in weaker companies that pay no dividend, have too much debt and have poor management.

For this reason a lot of stocks today like Google are able to be dropped like a stone. They have a good business model and relatively low debt, but they are speculative stocks, with high price/earnings multiples and no dividend. Google dropped from $370/share to $248/share in less than a month on nothing but speculation that the company's revenue will decrease due to decrease in ad spending by other companies. This is after a record profit posted by Google, which was outperforming for 4 quarters now.

... (oh and those people who voted for him twice are the reason this country doesn't grow as fast and as much as other countries)

Deficit. Spooning with the Saudis. High Corporate Taxes. Job losses. Decaying infrastructure.

 

[LowlyPion]

If you can play options, then you can get greater leverage. For instance Citibank (NYSE:C) shares Mar 09 2.50 strike Call, with earnings report in January looks like a good bet. Last traded 2.16 and current Price of underlying stock is 3.77. Figure the run up after the inauguration, a new year, and well into 1st quarter would make it a promising bet with play money. But it is a total gamble. The symbol for the option is CCY.X It will trade up on Monday most likely as after hours on C was already at $4.10.

Come March if it trades at $3.77 like today, you will make an automatic 70+% profit. Now I wouldn't put real money on this, because there is real risk, and Citi has underperformed to say the least, but if you want to play to win, something like that could pop as the current crisis passes. If it returns to say $10+ by then you will be looking at 500% gains.

Outside of a game let me say that this example is a total gamble for illustration purposes only, and I would be loathe to think anyone would take a flyer on something like this with real money. The reason I chose this is there is decent volume in the options. And it is way depressed.

Not a bad call if I do say so myself. But I'm guessing the OP didn't go this way.

C Mar 2009 2.5000 call (OPR: CCY.X)
At 3:59PM ET: 3.90 Up 1.74 (80.56%)

But remember if you try this at home: Actual results may vary.

 

[cronxeh]

Not a bad call if I do say so myself. But I'm guessing the OP didn't go this way.

C Mar 2009 2.5000 call (OPR: CCY.X)
At 3:59PM ET: 3.90 Up 1.74 (80.56%)

But remember if you try this at home: Actual results may vary.

Hehe true. But purchasing options (aka level 2 options trading) is not readily given to just any customer. Sharebuilder will let you trade level2 but they charge $1/contract. Ameritrade will give you level 1 (writing covered calls/puts), Zecco will give you level 1Speaking of worthless soup that became worth less today: CPB -2.75 (-7.58%)

I'm long DUG and may pick up TLL and SRS this week. 3rd quarter GDP results out tomorrow.. Thy Dow Shall Tank!

 

[mheslep]

Not a bad call if I do say so myself. But I'm guessing the OP didn't go this way.

C Mar 2009 2.5000 call (OPR: CCY.X)
At 3:59PM ET: 3.90 Up 1.74 (80.56%)

But remember if you try this at home: Actual results may vary.

That rise is almost certainly because the Treasury/Fed decided prop up Citi with debt guarantees; I see no mention of this in the earlier reasoning to buy the Call. Are you saying that government intervention was part of your prediction? Also, are suggesting now to sell or hold the Call?

 

[LowlyPion]

Hehe true. But purchasing options (aka level 2 options trading) is not readily given to just any customer. Sharebuilder will let you trade level2 but they charge $1/contract. Ameritrade will give you level 1 (writing covered calls/puts), Zecco will give you level 1

Well ... it's only a game. He doesn't have to actually effectuate the trade.

Fwiw Cramer is going Buy Buy Buy tonight so ...you can expect that his viewers will be sitting on the long shaft tomorrow.

But I don't look for oil to be dropping much with the Saudis likely dropping production.

 

[instant_ramen]

cronxeh, I followed your advice and bought the shares you recommended (with fake money). Again, it's only a game (for school)...

Lets hope everything goes well and I win the competition lol!

 

[cronxeh]

Well ... it's only a game. He doesn't have to actually effectuate the trade.

Fwiw Cramer is going Buy Buy Buy tonight so ...you can expect that his viewers will be sitting on the long shaft tomorrow.

But I don't look for oil to be dropping much with the Saudis likely dropping production.

Actually he said we will be retesting the 7500 levels but THEN he wants to buy buy buy, which I agree with. He said something to effect of great depression being off the table. I was watching his show and I couldn't believe he was so bullish and optimistic today compared with last Thursday when he cut up the money. I am still optimistic that we'll go down to Dow 7000. GM's preferred stock might be wiped out and unemployment might hit 8%. Bush can do a lot to make things worse between now and January, and as for oil, unless those Somali pirates steal more ships and some nukes it should keep sliding down


Btw I would hold Citi call, I still can't believe I sold my January $50 PUT on JPM back in October for mere 50% profit. Last week it was almost twice that