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The Investor Challenge / Re: investor challenge
« on: April 24, 2013, 01:16:51 pm »My view is that this is an "investor" challenge, and I for one treat it like that. As the dude in charge of the investment club I'm trying to simulate what I would've done if I were to invest R400k worth of our money.
OP does have a valid point though, sure his club member would be ecstatic over that return, but less of they lost 80% odd on the day.
I know I will never win this competition as one of the guys with all their money in a single equity is bound to get it right, I use this as a measure against myself and the ALSI to see my performance.
Just to quickly derail here....
Why not clone this competition and make a trading simulation! I not sure how much work that would entail, but I'm pretty sure you going to create huge traffic and maybe really earn some moola here for all the hard work you have put in.
Cool, going to try it out!
Sanlam used to have a similar challenge like this. You only had a once off amount to start with, lets say R100 000, and the winner is the person with the most value at the end date. Some trading were allowed, but IIRC you could only sell if you sell ALL of a certain share, and you could only buy more of a certain share, if you first sell them all. Kind of like a treating your investments as seperate batches. I would say that allowing at least an all sell of certain share would make sense, because if you made a bad investment in a share that continues to drop in price, the natural option would be to sell it to minimise your losses.
How would the tax man see that sale? Would that on it's own be enough to class you as a trader?
Maybe next year I'll run a trading contest, either in parallel or integrated with this one. Allow sales, but have two leaderboards, one for the investors, and one for traders. It might be interesting to see how they compare.
Well, if you are not actively selling your shares in order to make PROFIT, then you will not really be seen as a trader. You are allowed to sell your assets in order to limit or stop your losses (which is OK because there will not be any profit anyway). I also prefer a competition where it is more about smart investing than active trading. But as there is a leaderboard and there is a competition, one would like to be able to sell a share that is consisitently going into the negative, instead of holding on to it. In real life I would probably hold on to a share for at least 3 months before actually selling it, and as this is a 12 month competition I guess it is OK. With the Sanlam investment challenge, I think the only reason for the limited trading allowance was exactly to limit excessive trading and thus level the playing field between "normal" people and actual active traders that sit night and day. Also, I would think the software of the program would require a lot more sophistication as the trading increases. Only allowing people to sell if they dispose of all of a particular share, limits the amount of trading as one has to think twice before just selling. You could also not buy more of a share you currently had, unless you sold your current lot.