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Sharemarket Game news

Read the latest tips and updates for the Sharemarket game

May 2021: Movers and shakers 

It’s a tale of two contrasting strategies at the top of the leader board: ‘buy and hold’ versus active investing.

Here’s how the ASX Sharemarket Game leader board looked at the close of trade on Monday 3 May:

Position Player Name Portfolio Value as at 03/05/2021
1.

Pilar - QLD

$69,684.43
2. To The Moon - NSW

$69,470.66

3.

BUY GME AND SILVER - NSW

$69,447.94

4.

Mark Atmeltdown - NSW

$69,398.94

5.

Mae Trix - NSW

$69,020.40

Interestingly, while the top two competitors adopted very different trading strategies, they both had very similar stock holdings and returns during April – heavily favouring the materials sector.  

Less is more tops the table

Pilar showed that sometimes less can be more when it comes to playing the Sharemarket Game, making just one trade during the month of April. Pilar has a portfolio predominantly focused on materials stocks and appears to be adopting a ‘buy and hold’ approach – with zero sells recorded during April.  

Pilar also increased their portfolio holdings across the board in materials stocks Pilbara Minerals (PLS), Orocobre (ORE) and Galaxy Resources (GXY), along with software and services company EML Payments (EML).

‘Buy and hold’ is a passive investment strategy in which an investor buys stocks and holds them for a long period – regardless of market fluctuations. It remains to be seen if this will be effective in the relatively short timeframe of the Sharemarket Game.

But there are advantages to taking a longer-term approach. Investors may be less pressured into making badly timed decisions to try beat the market. And, from a cost perspective, less transactions means lower commission and fees – which can make a huge difference to long-term investment returns.

Activity delivers results

Last week’s leader To The Moon has now slipped to second place. They took a contrasting approach to Pilar in April, trading actively throughout the month while also favouring a materials sector investment theme.

Specifically, and in contrast with Pilar, To The Moon chose to hold the materials stock Champion Iron (CIA) versus Pilar’s selection of EML Payments, a software and services stock, generating approximately $1,000 less profit in April and thereby helping relegate them to second place on the leader board.

In terms of trading activity, To The Moon focused on the materials sector, buying shares in Pilbara Minerals (PLS), Galaxy Resources (GXY) and Champion Iron (CIA), and selling out of their stock positions in Oz Minerals (OZL) and Capricorn Metals (CMM) in April.

Trading more frequently may allow investors to take advantage of volatility and short-term market gains, but it can be more risky by leading to overexposure in a particular position or sector. When an active investor is correct in their analysis, this type of concentrated trading can lead to huge profits. However, the flipside of this concentration risk is that if the active investor’s analysis proves incorrect, it can also lead to big losses.

Most improved player

Indrani grabs an honourable mention, emerging as April’s most improved player with very strong performance (albeit from a lower starting point). However, by month end Indrani held only one stock position, CSR, after cashing out of the rest of their portfolio – potentially severely limiting their competitiveness versus other Sharemarket Game players in the future.

Important information

Information provided is for educational purposes and does not constitute financial product advice.

You should obtain independent advice from an Australian financial services licensee before making any financial decisions. ASX Limited ABN 98 008 624 691 and its related bodies corporate (“ASX”) does not give any warranty or representation as to the accuracy, reliability or completeness of the information.

To the extent permitted by law, ASX and its employees, officers and contractors shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided or omitted or from anyone acting or refraining to act in reliance on this information.

© Copyright 2020 ASX Operations Pty Limited ABN 42 004 523 782. All rights reserved 2020.

 

April 2021: Identifying market and price trends 

In our latest newsletter, we look at the trends likely to influence markets in 2021. We also explore some technical tools to help you spot price trends.

Key trends moving markets in 2021

As we all know, the sharemarket is driven by supply and demand – which is often driven by global events. So as an investor, it pays to keep on top of what’s happening around the world.

So what trends could influence the market in 2021?

In the past year, governments and central banks have cut interest rates to combat the economic impact of COVID-19. This is making it cheaper for companies to borrow money and to purchase new assets, potentially fuelling their growth.

As vaccines are rolled out across the world, there’s hope that the pandemic will end. This could bring renewed optimism across markets.

Another trend to watch is the continued digitisation of workplaces, which could buoy technology shares. And keep an eye on energy and materials stocks as the world transitions away from fossil fuels towards renewable energy.

Getting technical: price trends

Another way to analyse markets is to examine a share’s price history through a chart. Charts give you a quick visual picture of a share’s performance over the recent past. And while past performance isn’t a guarantee of future performance, it can help give you an idea of potential price trends.

Technical analysts use charts to identify:

  • an uptrend: when the price of stocks are rising, and
  • a downtrend: when prices are falling.

Some investors will only buy a stock if it’s in an uptrend. So how do you know? Check the pattern of rise and falls of the stock price. If each subsequent rise and fall is higher than the previous rise and fall, it’s in an uptrend. 

Trading sideways

But what about when there’s no discernible highs and lows? This is known as ‘trading sideways’. In this case, prices are likely to continue in the same direction as they were before.

Uptrend example: James Hardie Industries (JHX)

Downtrend example: PointsBet Holdings (PBH)

Resistance and support lines

Another way that technical analysts try to work out when to buy or sell a particular stock is by creating resistance and support lines.

To create a resistance line, technical analysts draw a line that connects all of the highs of a stock’s price. This indicates where the market is resisting going higher – at the price where sellers enter the market to sell more shares.

If a price breaks through this resistance, it may mean that sellers have decided not to sell any more of the stock at this price – perhaps due to good news about the stock. For technical analysts see this as a signal to buy. (Figure 1)

Similarly, a support line connects all the lows, and shows where the price is supported from going lower by the presence of buyers. If the line goes lower than this point, it may indicate that there are no longer any buyers at this price. (Figure 2)

Game Tip

To keep track of the companies you’re interested in, you can create your own watchlist. From your dashboard, click on Game play in the blue row on top of the page, then choose Company list from the drop down menu. To add companies to your watchlist, use the + symbol on the company list page.

To view your watchlist, click on watchlist from the Game play dropdown menu. To remove a company from your watchlist, click on the orange button next to the company name on your watchlist.

Figure 1: Creating a resistance line 

Figure 2: Creating a support line

Moving averages

A third strategy employed by technical analysts is by using moving averages: a series of averages of a stock price, which constantly updates. 

Technical analysts will often compare two different periods of moving averages – say, 10 days and 20 days. The point that the upwardly moving, shorter-term average crosses the longer-term average is the signal of when it might be time to buy. When the opposite happens, it may be the best time to sell.

Game Tip

To use the charting tool in the Sharemarket Game, go to your dashboard and click Charts from the Game play dropdown menu.  You can also bring up a price history chart for a company you’re interested in by going to Company list from the Game Play dropdown menu, searching for the company then clicking on its name.

Using moving averages: Computershare Limited (CPU)

Further reading 

 

April 2021: Movers and shakers 

Who’s ahead in the ASX Sharemarket Game – and what can we learn from their successful strategies?

Here’s how the ASX Sharemarket Game leader board stacked up as at 29 March:

Position Player Name Portfolio Value as at 29/03/2021
1.

Limitless – NZ

$60,237.47

2.

Sandals Prodigy – NSW

$59,026.44

3.

Vinkys – QLD

$57,698.58

4.

KL – NSW

$57,550.79

5.

Kingbaker – NSW

$57,536.09

Another noteworthy performance comes from Here We Go, our most improved player for the week. Their portfolio rose by an impressive 6.75% from the previous week to $51,691.37.

Let’s have a closer look at what both players are doing – and what lessons you could learn from their strategies.

It can pay to be active

Our leading player, Limitless, has been a very active trader. They’ve bought a range of stocks across different sectors, making a relatively large volume of trades in a short period of time. This has allowed them to capitalise on short-term market movements.

The Sharemarket Game has a short timeframe of just 15 weeks. So taking advantage of volatility and short-term gains can be a winning strategy.

Currently, Limitless is holding 6 stocks, with 3 of them in the resources and mining sector. Our most improved player, Here We Go, has also avoided spreading themselves too thinly, holding just 5 stocks right now. Two of Here We Go’s 5 stocks are in travel, while the other 3 are in resources and healthcare.

Undervalued stocks are potential gems

What’s interesting is that both players have invested in stocks that may be undervalued. In other words, the stock’s current price may not reflect the company’s underlying value.

Both Limitless and Here We Go have invested in gold stocks, which were flying high in 2020. However, gold may be facing some competition from bitcoin, which is becoming accepted by institutional investors as a safe haven ‘asset’ during times of turbulence.[1] Here We Go has also invested in regenerative medicine company, Mesoblast, which has had a volatile trading history in the last few months of 2020 and may currently be undervalued.1

Finding the value

Actively looking for and purchasing stocks that the market appears to be underestimating is known as value investing. Typically, value investors look for companies with strong fundamentals, but whose stock may be undervalued at present – perhaps due to some negative headlines, or because they’re in an underperforming sector.

To assess a company’s fundamentals, value investors analyse the company’s financial information, including:

  • the company’s revenue
  • how much profit it is generating
  • its return on assets
  • how healthy its cash flow is
  • how its capital is managed
  • its future growth.

Industry concentration

Both Limitless and Here We Go have chosen to concentrate on specific sectors: resources and mining, and travel, respectively. Anyone who’s read anything about investing will have heard diversification touted as a good strategy for managing risk. It’s true that concentrating on a small number of sectors may be a riskier strategy – but it also means you could increase your returns.

For example, you may decide to overweight your portfolio in telemedicine because you believe even after COVID-19 this be a growth area in the healthcare sector. If your view is correct, you could enjoy more returns than if you had diversified over a range of sectors.

Remember, the Sharemarket Game has a short timeframe. So it’s likely you’ll need to take more risks to win. In real life, you’re more likely to take a long-term approach – with a greater focus on managing your risk.

 

[1] Chanticleer, ‘The 'undervalued' stocks to watch in 2021’ AFR, 5 January 2021.

Further reading 

Important information

Information provided is for educational purposes and does not constitute financial product advice.

You should obtain independent advice from an Australian financial services licensee before making any financial decisions. ASX Limited ABN 98 008 624 691 and its related bodies corporate (“ASX”) does not give any warranty or representation as to the accuracy, reliability or completeness of the information.

To the extent permitted by law, ASX and its employees, officers and contractors shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided or omitted or from anyone acting or refraining to act in reliance on this information.

© Copyright 2020 ASX Operations Pty Limited ABN 42 004 523 782. All rights reserved 2020.

March 2021: Why add Exchange Traded Funds (ETFs) to your Sharemarket Game portfolio? 

The Sharemarket Game gets even more exciting this year. We’ve now included Exchange Traded Funds (ETFs) – giving you even more ways to build a winning strategy. 

Last week we helped you get set up for success in the game. This week, we’re going to talk about a new addition to the Sharemarket Game – Exchange Traded Funds (ETFs).

How ETFs work

Wouldn’t it be great if you could get exposure to a huge range of companies – in just one trade? That’s what ETFs allow you to do.

ETFs have been available in Australia since 2001 – and over the past decade they’ve really taken off. In some ways, they’re similar to managed funds. Your money is pooled with other investors, and the actual underlying shares or assets are owned by the ETF provider. But unlike a managed fund, you can trade them on the ASX – just as you would with shares. 

ETFs in Australia are typically passively managed. This means the fund manager tracks the performance of an index like the ASX200, or a commodity like gold or oil, rather than actively choosing the shares themselves.

Get more exposure, for less

So why would you use ETFs in the Sharemarket Game?

ETFs allow you to invest in hundreds of companies in just one trade. This makes it much cheaper to gain exposure to a range of companies. And it means you can track a range of indexes and gain exposure to various themes or sectors that could give you more growth – which is what you need to win the game. 

For example, if you believe sustainability is a high growth area you could invest in an ETF that tracks a sustainability index. Or if you think a particular sector like technology or healthcare is on the move, you could track a sector index.

Investing in ETFs can also help you save time and effort researching and choosing shares. 

Game Tip

To find the list of ETFs available in the Sharemarket Game, go to your dashboard, click on Game play in the blue row on top of the page, then choose Company list from the drop down menu. Click the Search icon  and type in ETF. This will bring up all the ETFs in the game.

Choosing your shares

Of course, before you buy any ETFs or shares, you need to be clear about what your investment goals are. Then you should choose the right mix of shares that help you achieve them.

Let’s look at a real-life example. Say you were approaching retirement and wanted to create a stable income. You’d be more likely to add more defensive stocks in your portfolio.

Also known as non-cyclical stocks, defensive stocks aren’t usually affected by changes in the business cycle. Sectors like consumer staples (think Woolworths, Coles and Coca-Cola Amatil) and utilities (such as AGL Energy or Spark Infrastructure) fall into the defensive category.

Cyclical stocks like airlines, hotel chains, car manufacturers and luxury goods manufacturers tend to be riskier as they’re more affected by changes to the economy. They often provide higher returns when the economy is doing well – but they can suffer during times of recession.

In the Sharemarket Game, the objective is to build your wealth in a short time-frame. So you’re more likely to have more riskier, volatile stocks in your portfolio than if you were investing over the long term.

Large, mid or small caps?

In the real world, a lot of Australians like to invest in large-cap stocks – mature companies with the biggest market capitalisation that make up the S&P/ASX 50. Large-caps include the big four banks, large energy companies like BHP, and supermarket giants Woolworths and Coles. They’re popular because they’re thought to be a surer thing – especially over the long term.

Interestingly, over the decade to January 2020, mid-caps, the next 50 companies that sit in the S&P/ASX 100, delivered the highest returns with the lowest volatility.

In the Sharemarket Game, you’re focusing on short-term gains. So it might pay to include some of the more riskier small-caps that sit outside the S&P/ASX, which offer the most opportunity for growth. 

Further reading 

November 2020: And the winners of Game 2 are…

Congratulations to the winners of the ASX Sharemarket Game! A close race for the final national first prize

 

It was a close race between the finalists of the national prize, with just a few 100 dollars between the three top players’ portfolios.  First place was taken by the first-time player, Stock95 from Victoria with a final portfolio value of $79,713. 

Coming in at a close second with a portfolio value of $79,391 is Nabin Sapkota of New South Wales. 

And in the third place, Pat Campbell from Queensland, who was in the first place right up to the day before the end of the game, coming in with a portfolio value of $79,219.  

League winners  

The top league in the category “11 players and up” was won by Stock Heads – a group of 11 players with a total average portfolio value of $75,221. 

The league, Stockerino, has taken top honours in the category of players with fewer than 10 players. With just 2 players in this league, they achieved an average portfolio value of $75,221. 

Special mention 

A special mention goes to the league – Smashing Champions – topping the overall average portfolio value for all leagues with an average portfolio value of $77,480*. 

The two Victorian brothers had also played in the schools game but wanted to challenge themselves and joined the public game. Congratulations to Jay and Charlie! 

*Note: both players in the league are under 18, and not eligible for a prize under the Game rules.  

 

Market summary for Game 2 

During the game period: 

  • The S&P/ASX200 was by up 9.7%
  • The two best performing sectors were Information Technology (code: XIJ) up 20.6%, and Real Estate (code: XRE) up 17.0%
  • The two worst performing sectors were – Utilities (code: XUJ) down 6.5% and Consumer Staples (code: XSJ) down 6.4%
  • The Top two performing stocks were – Ooh!Media Limited (code: OML) up 109.8% and  Corporate Travel Management Limited (code: ) up 95.6%
  • The two worst-performing stocks were  - OceanaGold (code: OGC) down 49.3% and Resolute Mining Limited (code: RSM) down 37.4%

 

National first place winner – Cam from Victoria  

How many hours a day did you spend on the game – including research etc.?

I spent about 20 minutes in total over the first three months, and then spent a couple minutes a day in the last week or two checking updates and making a couple trades.

My research would be around 1 minute on the stocks I would buy, some of them I couldn't tell you what the name of the company was simply the index code.

How did you select your companies?

I'd like to say I used some sort of "chart analysis", but there is quite a bit of luck involved in the sharemarket, I made some shocking trades along the way.

What was your strategy/plan?

My simple methodology was to select companies that had been affected by the economic impact of the coronavirus and that were sitting in a trough, but were also still solid companies and had been mostly sold out of panic by others rather than for loss of revenue.  

Did you stick to your plan? If yes, were you tempted to deviate from your plan? If not, why did you change?

My plan was to mostly let my stocks do their thing, the only time things changed was in the last couple of days where I made some regrettable day trades. 

How did you handle the market volatility?

I simply backed that over time the stocks I had selected would increase in long term value, instead of looking at short term sells (probably the same answer as most winners). Never buy or sell on emotion.

 

First runner-up – Nabin from New South Wales  

Have you plated the Game before? 

Yes, once before. 

How many hours a day did you spend on the game – including research etc.?

1 – 2 hours a week. 

How did you select your companies?

Research and selected undervalued companies. 

What was your strategy/plan?

Buy low, sell high. 

What was the biggest lesson you have learnt? 

Buy and hold is best for a huge gain. 

 

Second runner-up – Patrick from Queensland   

Have you played the Game before? 

Yes, for approximately 4-5 years

How many hours a day did you spend on the game – including research etc.?

Very little, it was a set and forget for me, maybe checking a few times a week. I became more involved closer to the end. 

What was your strategy/plan?

I chose good companies that were well undervalued because of COVID. I bought very COVID- affected shares and hoped for a vaccine to be announced before the game had ended. 

Did you stick to your plan? If yes, were you tempted to deviate from your plan? If not, why did you change?

Yes, I stuck to my plan right up until the final day, when I made a trade that cost me the win. 

What was the biggest lesson you have learnt? 

Not to panic-sell.

 

League winner – More than 10 players 

Stockheads from Victoria

Why did you decide to create a league? 

We created the league as a bunch of friends that wanted to compete with each other and have a little banter and fun along the way. We are all interested in the stock market and this was a good opportunity to have a try whilst learning.

 

Did you find that it helped you when playing together as a team?  

The game definitely did help. Many of us had different strategies and different stocks that we all chose based on the current uncertain economic conditions. Suffice to say, some did very well whilst some straggled a little. But overall we learnt to look for economic indicators in the news and tried to predict how the market would react accordingly.

 

Anything you’d suggest for future players? 

Follow the news and stay up to date.  Devise a trading strategy that works for you. Don't try to jump into stocks that are on the top 5 gainer board for the day.

 

League winner – 10 players and fewer

Stockorinos from Victoria

 

Why did you decide to create a league? 

Our motivation in creating the league arose from both John and I having highly ranked portfolios and realising that we would have one of the highest leagues if we created one. We both were in a big league with our friends and decided to create one just us two considering we were both having successful performances. We create leagues every year for us to compare our performances as a bit of fun.

 

Did you find that it helped you when together as a team?  

Creating the league helped us both, in terms of we were able to discuss some of our final portfolio moves and therefore have a bit more assurance before making a decision. Creating a league helped us give each other advice and just generally discuss certain stocks' performance. 

 

Anything you’d suggest for future players?

Read and research the stocks that look promising and then trust them, no need to sell too quickly you brought them for a reason. Sometimes you just have to buy volatile stocks as the game doesn't run forever, avoid purchasing low moving stocks. Reading companies’ reports and financial statements can be very helpful, as well as looking at their graphs prior to the game.