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June 17, 2010
The Day I Decided The Stock Market Was Gambling
Back in grade 12 I took an optional class in Economics, since I was fortunate to attend a high school with 1600 students and plenty of non-standard programming. A couple of weeks into the school year our Econ teacher announced that there was a national stock market competition, and anyone interested should contact him. It was free to enter, so I thought why not. It couldn't be that much work, and perhaps I would learn about the stock market.
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There were only four of us who were interested, and we called ourselves "The Investment Club". We requested a copy of the rules (via mail, of course, no email back then) and then registered our team with the Wilfrid Laurier University National Stock Market Competition for Secondary Schools.
We went through the rules and also the copious instructions on how to trade our stocks with the virtual stock market that they had set up for us. It was rather neat - we would use a school computer and a modem to telephone into the stock market competition system, and interact with the system through special commands. It reminded me of the movie War Games, telephoning into a mainframe system. Since I was the one most interested in computers, I was nominated to do all of the data entry, which I was quite happy to do.
The next step was to decide which stocks we wanted to purchase from the Toronto Stock Exchange (TSE). At this point I had a disagreement with the rest of the team. The other three members wanted to spend our virtual $50,000 in a diversified portfolio, buying a few thousand dollars of a number of stocks. I wanted to place all of our money in one stock. They thought that would be too risky, but I thought their strategy was way too conservative for a competition that only lasted a few months. If we wanted to win, we needed to take a risk.
Reading the rules, it stated that we were required to purchase at least ten (10) stocks, so it seemed that their diversified strategy would have to win. In actuality, I did both. I discovered that the rules allowed our little Investment Club to create more than one virtual team, so I created two virtual trading teams: one with their balanced portfolio of stocks, and one with my single stock pick. I still have the printout I created that day with the transactions on it:
Team #330, with the balanced portfolio, at the end of the competition ended up with slightly more money than it started with.
Team #329, with the single stock, ended up winning the national competition!
When news of our winning had spread to other secondary schools across the country, people wrote to us and asked how we did it - what was our strategy, and how did we pick the stocks? I received those letters, but never did reply. I just didn't have the heart to tell them that the stock pick was completely random - I just liked the name Pegasus Gold. That's it. In fact I thought the company had something to do with gold, but later found out they were in the oil industry.
At the end of the school year when all of us were graduating from high school, the four members of The Investment Club got to walk onto the stage and accept four separate envelopes, each with $125 cash in them.
The day that we won a national stock market competition - by a very wide margin - against hundreds of other teams, on a stock pick that was a whim.... I decided that it was all just gambling. Now looking back I can see it's more complicated than that, but not overly so for many "investors". I still don't have faith in the system overall, when market capitalization can be completely unrelated to the health of a company and more related to how in love people are with the stock.
Bless Pegasus Gold, though, for bringing me a $125 graduation present.
Posted by Hammer at 04:01 PM | Comments (0)
Rae LaCharity in Grade School
We're preparing to move to a new house, so I was rummaging through old boxes of stuff, trying to get rid of some of it so we have less to move. Buried in an old school folder in one of those boxes was material from Grade 7 and Grade 8, including two pictures of Rae.
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This first picture is the class photo from Grade 7, which is the time that my previous story on Rae starts. Rae is in the bright orange shirt in the middle row. I am also in that picture, but seeing how much different I look now compared to back then, it's no surprise that my own children can't pick me out. I tried to recall the names of everyone, but only managed about half of them.
Click the picture for a larger view
The second picture I found was from a photography class that Rae and I were in during Grade 8 at P.A.C.I. He and I were partners, and I remember wandering around the school yard with him, snapping pictures of the school, passing cars, and fellow classmates. One of our assignments for this class was a "studio style" portrait, so he was my subject and I was his subject. We sat on a stool in front of a large white canvas, and then grinned for the camera.
It isn't the best quality because this isn't a scan of the actual print we made, this is a scan of the contact sheet. But even from this grainy photo you can see Rae's genuine smile, and unlike my portrait that day, he really looks like he's enjoying himself. I still miss the Rae that I knew back then.
And boy, did he love that shirt.
Posted by Hammer at 11:28 AM | Comments (1)