CP Stock Simulator Game Thread

[Neeper]

Originally Posted by Daradon

Taking a hit on WBAI Neeper, you sneeky bee. :/ Haha.

Hey I did say I was dumping it! Lol

[Fire]

My PRAN gamble didn't pay off. Ouch!

[IliketoPuck]

You guys and your Isoray plays. Impressive gains. The fluctuations are too extreme for my tastes though.

[Neeper]

All stocks fluctuate. Its a matter of seeing potential in a company, so ISR, I am an investor. Some other stocks are trades, but not ISR for me.

[IliketoPuck]

Of course they do Neeper, that's the nature of the game.

This game has been very interesting to see different investment styles.

For me, cash flow is king. If a company doesn't have any, I don't invest. Balance sheet strength, management strength, and relative market positioning are huge factors in my investment decisions.

I think a very real distinction needs to be made between investing and speculating. When you say you see potential in a company, that is excellent, and you may very well be an investor on that basis. When a company has negative cashflow and is trading purely on potential unrealized upside, you are swimming with sharks that are speculating, not investing.

Like I said, interesting to see various strategies. There are many ways to make money with equities, no question.

Keep calm and Sven on .

[Neeper]

Yes there are many different investing styles for sure! I have always been a guy who likes to takes risks.... calculated ones with solid convictions based a mixture of informaton gathering, experience and gut instincts. Hell, I am deeply involved in 3 tech startups right now that make no money!

I've taken calculated risks my whole life. Most people wouldn't quit their managerial job to start selling stuff on eBay. I did that and built quite a good business and eventually sold my business to my partner to pursue wedding photography of all things! That did amazing as well for the last 7 years and now I am bored again. So, I've scaled back photography to start 3 new ventures that make no money!

No guts, no glory.

[Daradon]

Agreed, and that's why I thought it'd be fun to try. I'd never do what I'm trying with real money.

The first was learn how shorts work, cause I'd often think, it's a lot easier to pick a loser than a winner. So far I've only shorted BB, but it's one of my biggest profits.

The other was dollar cost averaging. I never had a portfolio where I could buy some, and if it went down, buy more. But that's how the big traders do it. You hear it all the time, the most money is made in a bear market, not a bull.

It's those times though, that the regular traders (the jones) lose their money, they can't play the game, which to a certain extent, I do think is rigged.

I just wanna figure the rig.

Don't get me wrong, a lot of jones can dollar cost average in their mutual finds, their portfolios, as long as the don't panic or are close to retirement.

But most don't. Most cause they panic, but a lot, unfortunately cause the own the mutual fund or stock approaching retirement. It's their savings. They lose.

[IliketoPuck]

I've always viewed dollar cost averaging as a form of confirmation bias.

Generally speaking there is a reason a stock is declining. Cash flow miss, poor operational results, negative press, etc.

To double down when something is declining makes no sense. Why not sell the poorly performing asset and put more into something that is performing well for you?

[Slava]

Because you have times like 2008-2009 when basically everything is down and it's not based on business fundamentals. So while you might say the banks got hammered in the crisis and rightly so, it doesn't mean they didn't take too much of a hit, or all of them should have dropped. Then you have quality businesses being sold because they're the only thing of any legitimate value at that point, but the selling pressures kill the price. That's a great opportunity to double down when the prices drop.

Those are glaring examples, but they still happen on a smaller scale if you don't believe in the pure market efficiency ideas.

[IliketoPuck]

Fair point Slava, but 2008 to me is classified as extraordinary circumstance at a minimum.

Quality businesses dropped in value, and it represented a once in a generation opportunity for those willing to be buyers. I certainly doubled down on certain companies then, and purchased some that I viewed as strong, yet undervalued as a result of the ongoing crises.

I think it is foolish to think that the average investor is able to beat efficient markets. I'm sure you are aware that asset managers that are able to consistently generate alpha are few and far between. Most that have an up year, are more than likely to have an offsetting regression the next. Those that are able to consistently generate above average returns are the exception to the rule, and are compensated accordingly. The general public is not able to beat computers and algorithms that trade on micro movements in milliseconds, it just doesn't happen.

Doubling down to me is confirmation bias. To throw more money at a stock that is declining, and has shown a trend of declining, is like going to the casino to make back the money you lost at the blackjack table the night before.

[Slava]

Originally Posted by IliketoPuck

Fair point Slava, but 2008 to me is classified as extraordinary circumstance at a minimum.

Quality businesses dropped in value, and it represented a once in a generation opportunity for those willing to be buyers. I certainly doubled down on certain companies then, and purchased some that I viewed as strong, yet undervalued as a result of the ongoing crises.

I think it is foolish to think that the average investor is able to beat efficient markets. I'm sure you are aware that asset managers that are able to consistently generate alpha are few and far between. Most that have an up year, are more than likely to have an offsetting regression the next. Those that are able to consistently generate above average returns are the exception to the rule, and are compensated accordingly. The general public is not able to beat computers and algorithms that trade on micro movements in milliseconds, it just doesn't happen.

Doubling down to me is confirmation bias. To throw more money at a stock that is declining, and has shown a trend of declining, is like going to the casino to make back the money you lost at the blackjack table the night before.

I understand that point of view, and I can see the attraction of indexing. I just think that while it takes a fair amount of work, there are advantages that a small investor has over the enormous corporations. I'll give you an anecdotal example. A few years ago I loaded up on a business and bought it for a bunch of clients. I saw that this was way undervalued, and it was clear that it was destined to be a good investment, if you were patient.

I talked to a few fund managers (once I had my position and clients in there, it would be great to get some big money buying!). Thing is they could see the opportunity, but it was meaningless to them. When you're running billions of dollars you really can't be interested in say a $100m company. Same goes for Warren Buffett; a gain of a few tens of millions is nothing and barely a blip. In the end this business sold for over three times the value I bought at, and as a small investor that's good money in a business with a huge safety net and that was basically like picking low hanging fruit. In a case like that you could see some "regression" the next year because not every company you have gets bought out every year; but to me that's a moot point because the index doesn't triple every year either.

I guess a lot comes down to how efficient you think the markets are to begin with. In my opinion they're not very efficient, and investors make a lot of stupid, near-sighted decisions. People invest in things where they have no edge whatsoever. They shy away from things at the very time they are the least risky, and buy them at the worst possible time. Anyway, I could write forever on this topic as its easily one of my favorites, but I won't bore you to death with all of that. Suffice it to say though, there are definitely mispricings in the market, and as a result money to be made.

[Daradon]

It doesn't mean you don't picka good stock or robust company though. Even the strongest companies stocks go down.

Sometimes those are the best sales.

[IliketoPuck]

Originally Posted by Slava

your previous post.

Perhaps I should have been more clear about how my specific investing strategy works.

When I say doubling down is confirmation bias, at the heart of my argument is the general hubris that many investors have towards stocks that they have picked because they perceive an undervalued opportunity, and don't know when to walk away. It's the "I picked this stock because I know what I'm doing, have identified value that no-one else can see, I just have to wait it will bounce back for sure this time, I like this stock because I picked it".....whatever people tell themselves when they continue investing in something that is losing them money.

If I can impart any advice at all, it is to be completely unemotional with the stock market. If after your due diligence something looks good, and you decide to invest, and it doesn't work out, trade that Olli Jokinen. No need to sign that stock to an extension.

I'm not saying don't buy quality companies, far from it. What I am saying is, why hold onto a company that is consistently declining, notwithstanding in the long run it might be a good pick. Why not deploy that capital in a more efficient way? Take your capital loss. Turn the inefficient capital into something that is generating you money instead of causing compounding losses by doubling down.

Market inefficiencies do exist Slava, no question. What I am saying is that on average, no single investor can beat the market, so why double down when the market has decided that a certain stock should be at a lower valuation?

I think we are talking apples and oranges. You are a professional investment advisor, with tools that the everyday investor does not have at their disposal.

Honest question: would you have doubled down on the investment you mentioned had it shown persistent negative returns?

[Slava]

I would some point cut my losses, but to be honest I will also buy and hold a company that literally does nothing for a long time. That can mean zero return, or nearly zero and no dividends. That's a negative return once you factor in opportunity costs and inflation. I can do that because I have a very specific reason I buy these companies to begin with, and I don't have the same 'occupational risk' that a fund manager might have where he has to beat the market every year, or finish in the first quartile for bonuses or whatever.

You are totally right though, because I don't continually pour money into a position. But if you're buying shares at $10 and suddenly they're $8 when nothing has changed in your thesis, then you can't be upset and stop buying.

[IliketoPuck]

Is anyone still making trades on the simulator, or have things fallen by the way side?

[Daradon]

I haven't traded anything in a while, mostly waiting for a few rebounds, but I still check in.

[calgarygeologist]

Originally Posted by IliketoPuck

Is anyone still making trades on the simulator, or have things fallen by the way side?

I still try to trade but I haven't been following the markets much lately and I haven't seen any great deals.

[GP_Matt]

I am slowly adding to my portfolio and creeping up the rankings. If it wasn't for Blackberry I would be crushing the Canadian side. Well, not crushing like some of you are, but beating my goals.

[FLAMESRULE]

Haha, wow. I'd totally forgotten about it after changing jobs. Looks like I've done ok...287% ARR. Too bad I didnt actually buy some of those stocks at those prices.

[IliketoPuck]

I've been happy with the returns so far, can't say I would ever use as much margin as I have in this game in real life, but it has certainly been interesting to see the impact of utilizing the margin on my overall returns.

U.S. side hasn't been great - only up ~20k or so, but my picks on that side are more of a call on the U.S. economy than anything. Canadian side has been quite kind to me, almost up 100k so far - most likely an unsustainable rate of growth, but interesting to watch.