Wednesday, January 27, 2010

Secret in picking the right stocks

After trying the Pro-Investor simulation game more than 100 times, I managed to find a secret that work well for this game. I click on the tab "Pick:" and sort the stocks in descending order of the column "Yield - 1 year". This sorting is done by clicking on the heading of the column. I pick the top 4 to 7 stocks in this list. I usually pick all of them, but may exclude 1 or 2 stocks. I found this method to yield quite good results based on the simulation formula used in the game.

The prices are generated based on a formula that reflects random changes for the country, sector (industry) and type of company. These prices will be random, but reflect certain underlying trends. If you adopt a certain formula, you may get good results on some occasions, but disappointing results on other occasions. But, I found the above strategy to work quite well. This strategy works on the concept that the best performing stocks in one year is likely to perform better than average during the following year (but may not be at the top), as the underlying trends is likely to persist for more than one year.

Try it here. You have to register an account to play the Pro-Investor game. You can read the Guide for a better understanding of the underlying concepts behind this simulation game.

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