Stock Market - Where to Invest?

[ThaiGreenTea]

What would be some good stocks to invest to? In my AP Macroeconomics class, we are going to play a stock market game where we invest $50,000 fake dollars.

The companies have to be American, and in NASDAQ.

I have a partner for this and here are some ideas we came up with:

-Beyond Petroleum
-Google
-Arms Companies


What we're supposed to look for are up and coming companies which will give major profit.

Thanks!

[thod]

You clearly have no idea.

Start with the big picture not companies, but sectors. What is going to go up in your given time frame and why. You are trying to make a convincing story. Tell this story to others so they can find the flaws. Great so you have decided arms companies are the next big thing. Now get a sector breakdown you need to know which companies are arm companies. You want up and coming companies, so you want small cap. Google does not match that criteria for example. Now start your research.

You want the story from each company. How do they make money, how are they going to make more money. How are they different to others and what advantages do they have. Who do they sell to, are there new customers they can reach, how much will it cost them to do so. You have to buy the story they are selling. Your judgment may be impaired so get others opinions. You don't want consensus, so if they say its a dog and you think its great don't buy. You must both go for it without influencing the other.

Next get the company reports and look read the financial. You are looking for nasties hidden in the accounts. How much debt do they have, how much cash will they need to make these new sales.

Next I would move to TA. The subject of TA is very broad but gives you signals of when to buy. It may be a great company but if its on a P/E of 100 then its way overbought already.

Don't be surprised to get it wrong. Many very smart people make a living doing just this.

[Dave C C]

Check into long standing companies like Texas Instruments.

[tp6626]

Look out for companies which have been perceived to have been damaged by this credit crunch, but still have high inherent value. They will bounce back. However, I imagine the timescales aren't long enough in your class to really see any skill working, so it'll be just luck.

Alot of the stock market is about putting money not on which companies will be worth more in the future, but what companies people now think other people will think to be worth more in the future. There's always a few degrees / layers of guesswork involved.

I read an example where a newspaper printed the faces of 100 women, and people had to write in choosing 5 most attractive faces. The entries would be used to create a ranking, and the person who's entry matched the top 5 would win a big prize.

Now, the best strategy wouldn't be to choose the most attractive, but to choose who you think would be generally thought the most attractive by all the other competitors.

Or, raising it a further degree, maybe it would be to choose who you think the other competitors would think would be the best generally perceived set of faces.

This second guessing can escalate for a few orders of magnitude, and makes stocks very tricky / complex indeed.

I'd suggest for your project: Wild stab in the dark. Are you feeling lucky, punk?

[Fej]

Now, the best strategy wouldn't be to choose the most attractive, but to choose who you think would be generally thought the most attractive by all the other competitors.


How does that make it the right place/stock to invest(Where everyone else is investing)? Please do explain, I am eager to hear why.

[Krazy P]

Right now - cash

There are a few small companies that specialize in helping banks process foreclosures.

[notoppings]

I don't have the educational background of most of the investors here, so I can only speak from my own experience. If you want to show a quick profit in this class project research frozen food companies. This is the season for increased sales with the holidays coming up. It has been my experience (I'm in transportation) that Sept-Dec we move at least 20% more frozen food then normal. I have always bought into food companies because I know the seasons and the higher sales volumes, for me it has always been a safe bet. I can usually increase my value by a few percent in a short time. ADM, Sara Lee, Swans, Pipping Hot. Basically anyone who moves Frozen pies, bread, vegetables, turkey. Check them out you won't be disappointed.