2007 ASX Stock Game South Australian winner

<brag>It is official yours truly is the South Australian winner of the ASX share market game.</brag> It has been all quiet on my website for a while as I have been busy with programming and other non-trading related tasks. I am sure everyone can relate to life getting in the way of all the best-laid plans. In case you are unaware with what the ASX share market game is, you might like to read my introduction to the ASX share market game.

How did I come first in South Australia in the ASX share market game?

I know you are all wondering how I came to be in first position so without any further ado I will tell you. It was simply a matter of buying shares holding them until they increased in value and then reducing my holdings via pending orders. Due to rules of the game, the pool of shares I could choose from was only 100 companies and could not short sell. As I do with any problem I face I try to break it down into its component form.

Components involved

After initial brainstorming, I came up with some very broad components that would need to be implemented in my strategy. These components are interrelated below is a simplified view of the various components that need to be considered:

Given this information, the best strategy I could use would be to select stocks that were highly correlated and stay out of any stocks that had exposure to the subprime. I did choose one banking sector stock as it had a quality loan book and no US market assets. My portfolio was heavily weighted to the resource sector with exposure to Gold, Zinc, Copper, Aluminium, Bauxite, Uranium and AUD/USD spot prices. Below is a chart showing my performance throughout the trading period. You can also see where I scaled back my resource market holdings.

As you can see in the final two weeks if I did not alter my strategy, my portfolio would be worth $3000 less and I would not have been in first place.

Game Statistics

National Performance summary

Conclusion

Although it was very humbling that I came first in the state and 13th in the country, the strategy that I used was highly risky and in the real world, I would not undertake such risk. In addition, I am reminded of a Ron Chernow quote:

“As a bull market continues, almost anything you buy goes up. It makes you feel that investing in stocks is a very easy and safe and that you’re a financial genius.”

At the end of the day winning the state division doesn’t mean a hell of a lot, my bank account is $1000 dollars better off, I don’t suddenly now consider myself to be an expert trader. I will continue myself education process and I believe entering these simulated trading games has helped my understanding of the markets.

About the author

Mark - Is a 28 year old form Australia. He has a Bachelor in Economics and a Major in CS. He is currently working towards his CFP. His interests include algorithmic trading systems, artificial intelligence, game theory and poker.