preview

Simulation

Good Essays
Analysis of the Stock Market Simulation

There are many risks that people take in their lives. Yet, investing in the stock market is one of the riskiest things to do. All the money that has been saved over years, possibly saved over a lifetime, could all be lost in the blink of an eye. The Great Depression was triggered by the most well-known stock market crash in history, another crash happened in 1987, and one could happen any moment. However, people invest to make money and through this simulation strategies and a basic understanding were compiled to get a perspective on the risk and tasks involved in investing.
Although not one of the high-ranking people in the class, the outcome of the simulation was not a bad one. I lost about five-hundred and seventy dollars. Yet, I could have done much worse. If I had invested the money in a CD or a savings account, rather than in the stock market, I would never have lost any money to begin with. In a CD or a savings account, there is a fixed interest rate and so your money always increases. There is also a fixed rate of return, whatever money you put into the bank, whenever you want to take it out it is there. Yet when investing in the stock market there is not set rate of return. In the simulation, my rate of return on the stocks that I invested in was -3.43% (for six months). Even though I lost money, I did better than I thought I would have done in the simulation. Going into the project I knew nothing and I adjusted and began to understand and succeed towards the end.
While investing in the stock market at the beginning of the simulation, I would pick well-known companies, such as Wal-mart or Exxon- Mobil, to invest in. Yet, as the simulation continues and I kept dropping the rankings, I decided a change of pace was necessary. To make sure that I was investing in the right stocks, I would view the portfolio of the person in first or second in the rankings and invest in whatever investments seem to work for them. In some cases they worked for me and in some cases they turned out not to be so good. Usually, the person in first or second place was able to cheat the system and split their stocks. Since I don’t know how to do that, they would sometimes split the stock that I had invested in, so for me the stock wouldn’t do me ...

... middle of paper ...

...mpletely foreign to me when we began the simulation. Yet, after the simulation is complete and the unit is tied up I have a better understanding of the language. I might not understand how to split a stock on the simulation, but I know why it is a good thing and what would happen if I did it. I know now to buy to cover when I short sell stocks. The most important thing I took out of the simulation though was not the language. Although useful, it was learning and experiencing, a little bit, of the risk involved in investing in stock. If I had not learned about the stock market, or the risk involved, I could have invested in the future and lost all my life savings. Or I could have not done it and missed out on making a lot of money.
Although the simulation was helpful and I learned a lot from it, there were times when I did not even look at the website. There was a long time when I didn’t make any transactions and I know that went for the whole class too. In the future, maybe it might me better if you had to make a certain amount of transactions per week, because it is a project and there is learning that needs to be done. And sometimes, there wasn’t.
Get Access