2 posts tagged “stock market”
caps.fool.com was the first ((international)) online fantasy stock market I was familiar with. It has been around for years and it's great, also has a great community. But it has three flaws if you want to use it as a trading simulation ...
- You have unlimited funds. You can buy/add new stocks at any time. This results in most players adding hundreds of stocks to their active portfolios.
- The transaction costs are simulated with a simplified 0-5% ((neutral)) and 5%+ ((positive)) percentage rating when you beat the index.
- You can get rid ((sell)) stocks easily by ending them without having a substantial loss, other than your ranking. Since funds are unlimited, you can ((at least try to)) make up your losses by adding new picks.
Enter Updown.com which was been around for almost 12 months now. You have a virtual ((one)) million dollar fund and there are several restrictions ie. you can
- only sink 20% of your portfolio into a single stocks and there are additional restrictions for stocks with smaller trading volumes ((only about 5% of the daily trading maximum if I remember correctly))
- there are transaction costs (("virtual" $100 for each buy and sell)) and you can set trading orders and limits up to 60 days into the future.
Most importantly, you have that limited amount of money and can't just add buy/sell recommendations. In short, it's a great simulation of the stock market. I have been on Updown.com for one month now ((since April 16, 2008)) and I am up 29,7% so far...
http://www.updown.com/displayProfile.do?id=64740
((I think it's not too bad considering there no options and you can't pick a single stock and just sit back because of the limitations. Currently, I have about 15 stocks in the portfolio ))
I have taken an optimistic view ((buys only)), so I don't think I can uphold that momentum this calendar year because I think valuations are ((too)) high if you take into account that consumers will spend much less in the coming months and company earnings and therefore P/E and PEG ratios may look worse...
The only issue with Updown ((not a flaw since it's targeted at the US market for now, I guess)): You can't pick many European stocks ((unless they are traded as ADRs on the NASDAQ or NSE)) so it's harder to play along for people like me compared to US players.
A good explanation/logic for the latest stocks drop last week...
http://www.nytimes.com/2007/07/27/business/27deals.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1185630931-kSZ9N5i4Kmlbh4EVaq1ARQ
What went up for 5 years can't go up forever. With ((most)) fundamentals quite solid, there is no big crash in sight as in 2000/2001, but a fall of about 10-20% is overdue...
There are three events that made me look at stock prices more closely than usual...
1. Sharp rise in oil prices, fall 2006
((that's when I got cold feet, I'm never happy to be the last to jump ship in the stock market :) - So I was and am looking at events 2. and 3. from a passive, safe haven perspective... ))
2. Stock drop in China in spring 2007 ((a local, largely irrelevant stock market used as scapegoat and triggering a global sell-off )).
((On an unrelated note: This example also shows how overvalued anything with the sticker 'China' is nowadays in Western business people. Reminds me of Japan in the late 80s.))
3. The latest smaller drops in july 2007 due to some bad indicators ((US housing market etc...)).
However, these indicator figures were mostly expected. More bad news and indicator figures are needed for a larger drop later this year or in 2008...may it be a slowing US economy, rising oil prices or interest rates...or something unexpected like a ((major)) terrorist attack in the Western World.
This is just a warning to all those people who are still enyoing the ride or are late to the equity party that started in 2002/2003.
It's time to fasten your seatbelts and thinking about getting out or at least diversifying in the coming months.
Just my contrarian cents, here's another one from a ((random, not one that I particularly recommend)) newsletter...the dreaded R. word Mr. Stack is using is strong, we will see in the coming weeks and months...
Is A Recession Dead Ahead?
James B. Stack, InvesTech ResearchWHITEFISH, MONT. - The U.S. economy is now in the sixth year of the fourth longest economic recovery of the past century.
This is when things can go wrong – and usually do.
I wish it weren’t so, and I wish I didn’t have to say it. But today’s economy is on a collision course with a recession. And the most probable starting point is the fourth quarter of 2007. Because the stock market typically leads the economy by six to nine months, you can guess what that means for Wall Street this year.
For the most part, we’re in uncharted waters when it comes to the housing sector, and the boom-to-bust unwinding has been underway for over 18 months.
Then there’s the unpredictable Dow Industrials. The DJIA has closed higher in five of the past eight trading days, but declining stocks outnumbered advancing stocks in seven of those eight sessions. That type of negative breadth divergence has occurred only 15 times in 75 years – the majority of which were in bear markets.
On Monday of last week, the DJIA hit a record high while declining stocks overwhelmed advancing stocks by a 2:1 margin. That ominous divergence has never occurred in the past 75 years of market history.
Divergences are also appearing in major indexes, as the headline-grabbing DJIA has risen over 1000 points in the past five months – but the small-cap Russell 2000 Index has slipped lower.
If that isn’t a flight to quality, I don’t know what is!
As a consequence, I am moving to a full bear market defensive mode.
