Friday, December 16, 2005

A competition:

So I was talking to my residents today, many who are also interested in investing in stocks and or have started to do so recently. We decided we wanted to do what most kids do in Junior High; pick some stocks, invest in them, and see who can make the most money. The catch is that in Junior High you use fake money and if you lose all of it you just get a crappy grade whereas as here we are using real money.

We are going to each invest $500 max. We are starting shortly after the semester ends and going at least until the new semester starts. This doesn't mean that we will be selling the stock at the end of the competition to prove we made the most money, we will just look at each others accounts and see who has the highest gains from investing and subtract the cost it would be to sell the stock.

I think this will lure a lot of the people participating into purchasing very low cost stocks, mainly below $10. This article, 13 great stocks under $3, gives some insight into purchasing low cost stocks while still keeping the risk fairly low. I found the tool they suggest somewhat difficult to use and wondered why the authors recommendations wasn't one of the built it searches. Remember if you use this tool, the stock ranked number 1 doesn't mean that it is actually the best choice. Using the authors advice you will end up with a lot of busted tech stocks as he mentions at the end of his article. Use a reference like Yahoo Finance to chart the stock sense its IPO to see if the stock has busted.

**UPDATE: We decided doing this would be a fairly stupid idea as we would end up paying more in commissions than what we would probably earn. Instead we are going to use the Market Watch Game to see who can make the best investment decisions without actually losing or gaining real money. The winner will get $20.00 which means it will only cost each play $5.00 if they lose, less than most brokerage firms charge for commission.

***UPDATE: As of 1/13/06 at 13:46 I am winning the competition.

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