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Schools

Sharemarket Game news 

Read the latest news and updates for teachers and students playing the Sharemarket Game. 

More resources

April 2021: Strategies for success

As in real-life investing, to be successful in the Sharemarket Game you need a good strategy – a plan that guides your investment decisions. Here are two popular strategies used by investors.

In our last newsletter, we shared some strategy tips from a former Sharemarket Game three-time winner. This week, we look at two popular investment strategies and how they could help you invest during the game – and in real life.

1. Tap into broader economic trends

Changing economic trends can make companies – and therefore markets – rise and fall in value. Things like interest rates, exchange rates, inflation and economic data might affect companies that you want to invest in.

For example, Australia’s interest rates are at historical lows at the moment – making it cheaper for companies to borrow money. This can be welcome news for businesses that are expanding.

Changes in exchange rates can also benefit (or harm) a company’s profits. For example, a falling Australian dollar can benefit Australian companies selling their goods or commodities overseas, as it makes their goods cheaper to foreign buyers. But for companies importing materials or services from overseas, a falling Australian dollar can mean their costs will go up.

Social and political events can also impact economic trends. For example, in March 2020, as people across the globe went into lockdown, shares in video conferencing software company Zoom surged.[1]

Some potential trends to look out for in 2021 include:

  • sustainability and green infrastructure investment as the world moves away from fossil fuels
  • a rise in Australian household spending
  • e-commerce, as more companies continue to do business online.

2. Analyse a company’s fundamentals   

Investors also need to understand what’s going on within a company. The company’s fundamentals – its financial data – can show you how it performed in the past and now. They may also give you an idea about its future prospects and how it compares with its competitors.

So how do you know if your investment is value for money?

Earnings per share (EPS)

One way is to work out a company’s earnings per share (EPS) – what a company’s profits are, relative to its price. To work this out, divide the company’s profit (minus its dividends) by the number of outstanding shares.

You can also compare how a company’s EPS changes over time to see if its profits are growing, stable or on the way down.

Price/earnings (P/E)

Another important factor to consider is a company’s price/earnings ratio (P/E). This is the current share price divided by EPS.

Let’s say you’re comparing two companies that provide similar goods or services. Company A has an EPS of $3 and its current share price is $45. Company A has a P/E of 15 – this means its stock is trading at 15 times its earnings.

Meanwhile, company B’s EPS is $1.50, while its current share price is $60. Company B’s P/E is 40 – so its stock is trading at 40 times its earnings.

So does this mean that company B is expensive compared to company A? Perhaps – or it could have great growth prospects. Similarly, company A may be a bargain – or its profits may be declining.

Return on equity (ROE)

Another way to measure the performance of stocks in similar companies is by working out their return on equity (ROE) – how much profit companies generate from their assets. To work it out, divide a company’s net earnings (its profits) by its shareholders’ equity (the company’s assets minus its liabilities).

For example, say a company earned $10 million net last year, and has $100 million in shareholders’ equity. To work its ROE, divide $10 million by $100 million – which will give you a ROE of 10%.

Remember that ROE doesn’t include how much debt a company has on board – and high debt may increase a company’s risk. What’s more, using ROE to compare companies in different sectors may not be the best move. That’s because ROE doesn’t take into account things like how much capital a business needs to invest to produce its goods or services.

 

[1] Natasha Gillezean, Zoom shares shoot up as it targets global shift to hybrid working, AFR, 2 March 2021.

Game tip 1

You can use our charting tools to identify trends and opportunities to buy and sell a stock. To do this, go to your dashboard and click on Game play in the blue row on top of the page, then choose Company list from the drop-down menu. 

Game tip 2

To find which stocks are experiencing the greatest rises or falls this week, go to your dashboard and scroll down to the stocks on the move tile. 

 

Further reading

March 2021: Lessons from a former winner – and a new addition to the game

Get some tips from a three-time sharemarket winner and online investment platform CEO – and find out about a great new addition to the game. 

Three tips from a 3-time winner

20 years ago, Chris Brycki’s dad sat him down to teach him about shares. Chris went on to become the founder and CEO of Australian online investing business, Stockspot.

Chris is also a three-time winner of the ASX Sharemarket Game. But his first go wasn’t that successful – largely because he took a long-term, conservative approach.

So what made Chris a winner? Here are his top three tips.  

1. Do your research

Chris started having success when he began looking at current affairs and noticing how world events affected companies.


During the tech boom of the late 1990s and 2000s, Chris focused on tech shares. Then after September 11 when insurance stocks plummeted, Chris bought them at a cheap price and sold them when they rose, making a profit.

Chris also recommends that players research the different market sectors – then pick one that’s in the news and which might be volatile. When he was playing the Sharemarket Game, he relied heavily on the ASX website to drill down into those sectors of the market and identify potential companies.

“These days you have a lot more choices, with people discussing shares on social media platforms like YouTube, TikTok and Instagram.”

2. Think about your timing

In the Sharemarket Game, it can be tempting to get involved from day one and buy up a lot of shares. But there’s a danger of exhausting your opportunity to buy more down the track.

“Sometimes it makes sense to sit back and look at what’s going on and potentially buy later when prices may have fallen,” he said.

3. Take some risks

Chris stresses that in real life, he focuses on investing for the long term. But the Sharemarket Game has a very short time frame, so that requires a different strategy.

“You need to have a lot of concentration in your portfolio, which means putting a lot of money into similar companies rather than spreading it across different industries,” he said. “The most volatile and exciting are the ones that tend to help people win.”

Get more exposure with Exchange Traded Funds

When Chris was playing the Sharemarket Game, Exchange Traded Funds (ETFs) weren’t part of the game. But he says he wishes they were.

2021 is the first year that we’ve added ETFs. So what are they – and how do they work?

ETFs give you exposure to hundreds of companies in one trade. With ETFs, your funds are pooled with other investors’ money to buy a basket of shares. This makes it much cheaper to get exposure to a wide range of shares than if you had to buy them individually.

With an ETF, you invest in a portion of the underlying shares. You don’t actually own them – the ETF provider does. But you’ll benefit if those shares rise in value. And if any shares earn dividends, you’ll get a portion of them too.

In Australia, ETFs are passively managed. This means they track the performance of an index like the ASX200, or a commodity like gold or oil.

“ETFs are a great way to access lots of companies or a particular thematic of the market,” said Chris. “If I was playing the Sharemarket Game today I would probably use ETFs to give me exposure to an area of the market that was doing well and was quite volatile.”

Because you can create a more diversified portfolio, you can also use ETFs to better manage your risk. And ETFs can also save you time and effort in researching and choosing shares.

Unlike some investments, ETFs don’t have a fixed-term contract. So you can sell them quickly on the sharemarket if you want to.

Further reading

November 2020: Announcing the winners

The winners of 2020 Schools Sharemarket Game 2 and their insights on what made them successful.

Now that the Sharemarket Game is over, it’s time to congratulate our winners and look back on ups and downs of the last 10 weeks. And there certainly have been a few ups and downs to deal with!

Weighed down by worries about the pandemic and events like the US election, the sharemarket stayed largely steady throughout the game, with the ASX 200 index lifting just 1.9% between 28 August and 6 November 2020. Yet that didn’t mean there weren’t opportunities to be found.

Our top-performing student, Hugh from Christ Church Grammar in WA, managed to grow his portfolio by an amazing 23% – and several other competitors weren’t far behind.
So congratulations to our winners and to everyone who took part – we hope students had fun and learned something along the way! And remember, there will be more opportunities to test their trading skills, when registration opens for our first game of 2021 on 11 February.

  Syndicate  School Member Portfolio Value 
National and WA winner Vines Investing 

Christ Church Grammar School, WA Hugh (Year 10) $61,420.86
National runner up and NZ winner The Avengers  Otumoetai Intermediate, NZ Pania and Milla (Year 8) $60,445.44
National 3rd place and Qld winner Magic  Helensvale State High School, Qld Isobel (Year 9) $59,738.71
Tas winner  Sam Boonstra  Southern Christian College, Tas Sam (Year 9) $59,554.62
NSW winner Stocky Docky Fort Street High School, NSW Lachlan (Year 7)  $59,446.52
SA winner  Gusholnatla Westminster School, SA Holly, Natalie, Lachie and Gus (Year 10)  $58,415.19
Vic winner  Ripley P Marist Sion College, Vic Ripley (Year 9)  $58,320.33
ACT winner  King Cliff  St Mary MacKillop Catholic College Isabella Campus, ACT Jack and Ben (Year 12)  $56,831.38
nternational Winner  YeonWoo-Sua Fukuoka International School, Japan Sue and YeonWoo (Year 10) $55,064.46
NT winner  Kaye Ess  Casuarina Senior College, NT Kennith (Year 10)  $54,834.12

The successful teams used an interesting range of strategies. Here are a few of their insights:

"My tactic was to evaluate companies that seemed to have been on an extreme low and started to rise. I also thought about the sort of companies that would survive and flourish during this time of crisis, the COVID-19 pandemic. I predicted the incline that was to occur on my stocks and read the markets movements accordingly. 

Research was a necessity … I researched the companies’ movements in times when the market itself was poor, and then predicted the same pattern would take place. 

I held my purchases as I was confident the rise of my stocks would not diminish. At times my peers would tell me to sell or to purchase more but I ultimately disregarded their opinions and stuck to the original game-plan.

The stockmarket is like a puzzle – you just have to find the pieces that fit!”

– Hugh (Year 10), National and WA winner

 

“Ripley purchased shares in lots of different companies (his final portfolio consisted of 14 companies). He kept those making a profit and if a company was losing money, he got rid of it quickly. He did research using The Bull, but each time he followed the recommendations that company lost him money! When he was on top of our league, he became more cautious … he stopped buying and selling in the last two/three weeks, even though ILU was over $4,000 in the red. This proved a benefit as ILU paid a dividend of nearly $4,500 which negated the loss and kept him on top.”

– Peter Grbic, teacher of Ripley (Year 9), Victorian winner

“My advice to help others would probably just be confident, don't second guess yourself half-way through!”

– Lachlan (Year 7), NSW winner