The rule of the game is to try to make as much money as you can in eight weeks with a given initial $50,000 endowment. In the situation of a consortium will be to make as much money as possible on a per firm basis.

You are allowed to invest only in common stocks that are listed in NYSE, AMEX, and NASDAQ.

 

There are, however, a few rules you need to follow:

Rule 1 Your team needs to trade at least once a week, i.e. you cannot adopt a buy and hold strategy for your portfolio.
Rule 2 All your transactions have to be round numbers (however, odd lot transaction is permissible). In other words, you have to buy 36 shares of stocks instead of 35.7 shares. You can place either a buy or a sell order, but you cannot place a short-sell order (i.e. you cannot sell something that you do not have).
Rule 3 To make things simpler, you are not allow to make any transactions on margins.
Rule 4

All your money has to be invested at all time. However, since all your transactions (in units purchased) are in round numbers, you might not be able to completely invest all your money. In that case, you can deposit your cash in a non-interest bearing checking account. However, it cannot be more than $500 (and it cannot be negative either).

Since the time frame of the Investment Challenge is very short, you should ignore the interests and dividends from the securities in the portfolio. You should follow the following rule for transactions after your initial investment:

[Amount sold - commission for selling + cash] - [Amount bought + commission for buying] = 0

Rule 5 You have to pay commissions for all your executed orders. We have chosen Charles Schwab as our broker. Please follow its guidelines for paying commissions.
Rule 6

You can place your orders anytime between Monday and Friday for each transaction week. It is recommended that you place your order via e-mail.

Since the Wall Street Journal reports only the closing prices of the prior trading day, you will be buying the securities at that price. In other words, if you are placing an order on Tuesday, you are actually buying the securities at Monday's closing prices (which are reported in Tuesday's WSJ). Please note that you have to place your orders based on the prices reported in the most recent WSJ, i.e. if you place your orders on Wednesday, you need to use the Wednesday's WSJ.

Note: If you have access to the World Wide Web, you can use any of the quote servers for your quotes.

Turn in a report/spreadsheet detailing your transactions and the value of your portfolios for the week on the following Tuesday during class. Your transactions have to match the orders you placed.

It is expected that the spreadsheet reports you turn in has a professional look, i.e. it should look like a report you present to a client. A copy of a spreadsheet report wil be provided for your reference. Make sure you keep a copy of all your reports.

Rule 7 There are 8 weeks for the investment challenge (i.e. 8 reports/transactions), and you have to place orders for all of them.
Rule 8 Your team needs to make a professional presentation to Mrs. Allot O'Dough at the conclusion of the Investment Challenge. Your team can use any forms of presentation such as PowerPoint, overheads, handouts, etc. Keep in mind that the outcomes of of the Challenge and the presentation play important roles in the decision making process of Mrs. Allot O'Dough. In addition, your team needs to turn in an 8-10 page report that details the strategies your team has adopted, the outcomes of the Challenge, and other relevant materials that will help your team win the account. This is basically the written report of your presentation. Keep in mind that the report has to be typed and has a professional look.

The goal of the Investment Challenge is to provide a fairly realistic environment where you can conduct your trading. Your performance in the Investments Challenge is determined by 4 factors:

Weekly Spreadsheet Reports 40 points
Final Value of Portfolio 30 points
Presentation 30 points
Final Written Report 50 points

Since this is a challenge among firms, the points you will receive for the final value of your portfolio depends on the values of other portfolios. The team with the highest value will receive the full 30 points, the second highest value will receive 27 points, the thrid highest will receive 24 points, and so on.

In addition, your team will receive 5 bonus points if the value of your portfolio (per firm) is greater than $50,000; and 10 bonus points if it is greater than $100,000; and 15 points if it is greater than $150,000.

You have several weeks to get familiar with the market and the types of securities before the Investment Challenge begins. The Wall Street Journal Guide to Understanding Money and Investing is an excellent source for the financial market and its instruments, and you are welcome to discuss them with me prior to the start date. However, you cannot discuss what you should buy or sell with me once the Investment Challenge begins.

1st transaction week Week of March 2 to 6
Last transaction week Week of April 27 to May 1