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Your Take: The Stock Market Game

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Stock MarketMy friend Scott (you may remember him from those times I mentioned his charity bar tour Ghent Bar Tours) sent me this story about how the stock market game is a bad bad game… and I agree.

The stock market game, if you’ve never played it as a kid, was a national competition where teams were given $100,000 in play money to “invest” in companies. The goal is to help teach students how to invest, how to research companies, etc.

The real end result is that you learn how Wall Street really works… in order to get the greatest gains in 10 weeks (or however long), you need to find good companies that explode in value. These companies are probably going to be tiny, penny stock types, and you go all in on the hopes they double or triple on a whim.

I like the idea of these games but I agree with Chuck Jaffe, the lessons you actually learn are the wrong ones.

Did you ever play this game? What did you think about it?

(photo: sathellite)

{ 10 comments, please add your thoughts now! }

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10 Responses to “Your Take: The Stock Market Game”

  1. I remember doing something like this early in high school, though I do not believe it was the national game. I think it was fine, but there was little offered in terms of real lessons. For the most part we all picked stocks of the companies we knew…Nike, MCD’s Coke etc.

  2. Master Allan says:

    This activity was in my senior economics class back in ’97. We did not team up, all individual research and guesses. I picked Apple computer and did quite well. Not first place but the volatile company expected to fail before the new millennium earned me a return of 5 – 10 % (I can no longer remember)

  3. Demi says:

    Jim and all…I’m sorry ahead of time for my honesty but…I think the biggest lesson I learned is still well practiced on Wall Street today; when I lost it all…(which my economics team did in less than 2 weeks) it didn’t matter. It wasn’t MY money anyway. And…there was nothing the investors could do to me other than fire me. Which was ok. Because in 2 weeks…I’d just be with another firm making 6 figures again anyway. Wall Street demonstrates…to me…what its like to have money and take risks with little recourse for mistakes.

  4. It depends on your philosophy in investing. If you believe you should find a good deal that will ‘explode’ soon or find penny stocks that will do the same soon then the game is a good one. If you believe in finding a good quality stock and holding on to it for the long term the game isn’t helpful at all.

  5. Cap says:

    I remember this during econ class back in HS. The thing is, I’m fairly certain we didn’t learn any lessons of sorts from our variant of the stock market game. Like John, all we did was tried to pick companies we aware exist so thats the usual big brand names…

    since it was the dotcom era, a lot of us would have been wiped out (though those that picked Amazon etc may win out – if the “game” lasted more than 10 weeks anyways).

  6. Shafi says:

    I played one stock in the money game and I lost all $27,000. In real life, I played the same stock and I lost $27,000 in real money. Stupid, huh?

  7. admiral58 says:

    I would agree that the game isn’t the right lesson. They should focus on asset allocation and risk tolerance.

  8. Fat Clemenza says:

    What the Stock Market Game should really teach is that well over 80% of active money managers fail to beat the S&P 500 over any meaningful time period and therefore, paying an active money manager – and the legions of sales people who get paid to dupe investors into sending them money – is a foolish waste of time, energy and money.

    Wall Street is a massive skimming operation. Not playing the Wall Steeet Game – by investing in index ETFs and better yet, indexed annuities or life where principal is protected – is how you win.

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