Virtual Career Coach

Home

Forum

Career Related Topics

Virtual Career Coach
- Virtual Career Coach

Ask us questions about career paths.

Questions/Discussions

Sort by Date ▼ / Top Rated

stock trading

Here's a question that was posed to us: "in my financial markets class, we have a mock trading competition going on, and whomever wins at the end of the semester (70 or so days) will get a 10% increase in total points for the semester, which could potentially boost the grade up a letter. i, obviousl... Here's a question that was posed to us: "in my financial markets class, we have a mock trading competition going on, and whomever wins at the end of the semester (70 or so days) will get a 10% increase in total points for the semester, which could potentially boost the grade up a letter. i, obviously, really want to win; how do you suggest i go about this / what should i be looking at research-wise?"

our short answer:

If you aren't following the mkt each day, this is tough if not impossible to teach since your actions and selections now will affect the end portfolio value. In short, Identify the sectors that you think will outperform the market. Your goal isn't to maximize your profits but to beat the rest of the class. So considering what's going on now in the mkt, read up on interent, WSJ etc on what industries will do the best in this craphole of an economy. Then, within that sector, pick the best companies. The way to win is to totally pick specific stocks and not diversify. However the risks are obvious. If you don't pick the right stocks you really lose.

For instance, things to think about:
- traditionally in good times, small cap stocks do well as they usually play into niche areas. In bad times, small caps don't do well because no one is buying and they have less room for buffer since they don't have as much economies of scale
- clearly the banking sector is hurt right now. No one is immune but if you think there are a couple outliers, then pick them
- oil & gas: as oil prices go up, integrated oils like exxonmobil do well, refineries like valero don't. As oil goes up, airlines suufer. Opposite is true. So take a stance on oil prices. Read up on full implications and make a decision
- retailers - discounters like wmt do well now, as does costco. But then costco got hurt more than wmt since costco had less room to quickly raise prices whereas wmt is able to control prices more but costco has a lot of private label (kirkland) so when costs up, they couldn't pass along as quickly
- since you are now literally living thru history, and the bailout hasn't passed yet, ask, who will benefit most when it does pass? Make the bet
- think global economics and the balance of payments and interest rate parity. As the US needs to issue more debt in future for bailout and other reasons, the $ will likely continue to depreciate. So pick companies with lots of international exposure. However, its relative to europe and asia - if they suffer more than US, then dollar will appreciate, if not, then reverse
- you probably can't short else you can do lots of stuff. Pick the opposite and short them to magnify returns

Final assessment: research all the different trends and relationships. Identify what you believe will happen and go from there. This is what portfolio mgrs do and takes yrs to perfect. Welcome to finance. Read More

Show All 1 Replies Login to Reply

by Guest 1.

added 11 years ago

Show More Show Less