While other students begin to do homework, senior Stanley Krzesniak sifts through lines of text, making sure to examine each individual line vigilantly. Carefully, he evaluates the consequences of each click, noting that his actions will impact the amount she will lose or gain from his original $100,000 investment. Along with other students in Dr. Frederick Chancellor’s CP Economics class, Krzesniak took part in an online stock market simulation to try her hand at navigating the stock market.
After learning about investments in class, the class engaged in the simulation hosted on the website howthestockmarketworks.com.
Each student was given an initial $100,000 to invest in NASDAQ, NYSE, TSX/TSXV, and AMEX stocks. Students were allowed to purchase or trade stocks valued at $5 or higher.
The hours reflected the real stock market, as students could only trade and sell stocks between 9:30 a.m. and 4 p.m. eastern time, excluding holidays.
Through the simulation, students obtained firsthand experience of payments, risk, investments, dividends, and profit.
Chancellor says, “It encourages them to think and apply. All receive experience and emotional ups and downs.”
Sometimes, the experience causes students to reevaluate their vision of the market and its predictability.
“A big thing students learn is that the stock’s price has nothing to do with profit, but our confidence in its success. It’s a shock for students to realize that it is supply and demand and not about how well the company does,” says teacher Heather Sadlon, whose Economics class will be doing the simulation in the spring.
To make the simulation more intense, Chancellor created a period-based competition with incentives.
“I have something called Econ Bucks, and each student is expected to earn 1,000 Econ Bucks for participation in class. The winner gets 250 Econ Bucks, followed by 175 and 100,” says Chancellor.
From their experience, both teachers have noted that the competitive spirit varies from individual to individual.
“Most kids buy the stocks during the first part and hold them,” says Sadlon. “Others are really competitive and download apps so they can constantly check.”
Despite the difference, students demonstrate greater knowledge and aptitude for the market, as seen in their selection of stocks and strategies.
“The strategy to sell stocks is to see when the value is high. The higher the price, the more it will sell,” comments senior Erika Assoun.
Luck remains an important factor, but solid research also contributes to success.
“I keep telling them to research the company and not to fall in love with the stock. They need to see how well the company is doing before they buy it and not think about holding onto it for a long time,” says Chancellor.
When asked how he would pursue the simulation, Chancellor comments, “I would look at stocks from a company with solid performance because people pay attention to those. Also, I would take note of a company’s earnings, keeping in mind whether it is attractive to the new owner. When I buy and sell, I want the new owner to buy more than I paid for [the stock].”
Others depend on short term strategies.
“I invested in Apple, Oxygen Biotherapeutics, and Gastar Exploration and bought cheap $6 stocks. I did a lot of short selling; one wrong move, and I could have lost all my money,” says Krzesniak, who dominated the competition with a 97.2 percent gain.
“In one transaction, I made $12,000 in four minutes, but another time, I lost around the order of $15,000,” continues Krzesniak.
Taking into account the short span of the project, other students relied on more specific strategies to earn quick profit.
“I usually buy the lower stocks and when they go up a little, I sell them,” says senior Mosman, who ranked second in his class.
Although students employed a wide variety of strategies during the simulation, most realized that some would not be practical in long term investment.
“In real life,” says senior Riley Mosman who, like Krzesniak, also attempted short selling, “I would not invest in $10 stocks because I would lose a lot of money in seconds. I would probably invest in a stable company no matter what, even if I wouldn’t earn as much money as rapidly.”
Indeed, through the simulation, students were exposed to the risk involved in certain kinds of investments. As Krzesniak puts it, “Be careful. Don’t risk too much money.”
