The virtual Stock Exchange with Bull Shark

Résumé du document

The virtual Stock Exchange is a way to understand how stock trading works without taking any real financial risks. In fact, within nine weeks, The Bull Shark bought and sold real stocks by fictive money. Each of us started the game with 200 thousand dollars and our main goal was to yield a profit by developing trading financial strategies. The Bull Shark decided to focus on an active management, based on short term trades. We didn't follow the efficient market hypothesis and try to profit from the market in order to identify mispriced securities. During this experience, we met successes but we were also challenged with a lot of difficulties that has affected our trading process. Adaptation, constant monitoring, coherence and also risk taking are the key elements of this game.

Extraits

[...] It evaluates the return that can make an investor on a future contract on this raw material We anticipated an increase of the value because it was the biggest fall for three months. This fall is due to the discussion about the American sugar's quotas. Indeed, for few weeks we noticed an inflation of the price paid by US for sugar in comparison to the rest of the world. This inflation alerted the US Department of Agriculture which decided to review and change the import quotas. [...]

[...] The virtual Stock Exchange with Bull Shark Bull Shark Executive Report Table of contents Introduction 2 I. Successes Qualitative analysis 2 A. Agnico-Eagle Mines Ltd. (AEM) 2 B. Alcatel-Lucent (ALU) 2 C. ERY 6 D. INFOLOGIX (IFLG) 2 II. Big Loses Qualitative Analysis 2 A. [...]

[...] So if the Jensen's measure is positive, the asset has outperformed on a risk-adjusted basis. So, once again, we can note that during that period, our portfolio has outperformed on a risk-adjusted basis. Ex-Post Return We will present the analysis for the Ex-Post Return calculation for the BGZ stock: Loss = 4703 * 14.121 ( 17.08 * 1753 + 15.25 * 2950) = - 8517.67 Amount invested in the BGZ stock: = 17.08 * 1753 + 15.25 * 2950 = Percentage of the BGZ stock in the portfolio = amount invested in the stock / total equity = = HPR for the month: selling price = 14.12 ; weighted buying price = 15.93 Because we bought actions twice, we calculated the average costs of purchase, balanced by the quantity: (2950/4703)* 15.25 + (1753/4703)* 17.08 = 15.93 HPR = ( 14.12 - 15.93 15.93 = - HPR annual : we kept the BGZ stock exactly 1 month what simplifies the calculation = 1 = 0.11 ) 12] 1 = - So, on an annual basis, our Ex-Post Return for the BGZ stock is - Allocation capital risk Thanks to the Allocation capital risk analysis, we can examine the risk and return tradeoff: Allocation of risk between companies' shares and ETF We can note that at this time of the game, the risks of our portfolio were well diversified. [...]

[...] We tried to use the maximum of tools to make the best decision. The second lesson is that trading is over everything linked with psychology and we really experienced greed and fear reactions when we had to take decisions. We are always tempted to wait a higher increase of the value to sell it and make a better profit to cover some eventual losses but sometimes it was too late and we lose more money. For these reasons, we understood in the end why risk and return calculations were so much important to forecast the risk and return you are exposed to, in the choice of investing in certain asset classes. [...]

[...] We are now conscious of this measurement and will try to invest smartly and perhaps more passively. http://www.leblogfinance.com/2010/02/cloture-cac-40-17022010-une- poursuite-de-la-hausse-conditionnee.html http://online.wsj.com/article/SB10001424052748704416904575121923474628444.ht ml Buy Sell Buy Sell IYE Weighted in Rp (risky portfolio): = / = IYE Weighted in the complete portfolio: = / = 10% C Weighted in Rp (risky portfolio): = 19883.2 / 238420.68 = IYE Weighted in the complete portfolio: = 19883.2 / 238420.68 + = Because they are stocks; there is no correlation between the duration and gain; everything is uncertain. [...]