I have read through a number of the post around this competition as suggestions are still being made for next years competition and what the rules should be. The previous competition was canned due to the fact that you selected 5 counters for the forthcoming month and hoped like hell that you chose the right shares - the reality was that it was nothing more than a lottery. This competition was to test peoples ability to invest over a longer period, but becomes a lottery certainly from about September onwards as you try and invest your monthly allocation in a manner that it gives you good returns over a diminishing timeframe - and its all our hopes that we still create a pile of wealth to win the competition at the end of the year. So in essence funds invested from September onwards are going to go towards more riskier counters to try and optimize returns to keep you in the competition - and at the end of the day a penny stock may just win it for a competitor. I have not been in favour of the monthly allocation primarily because it encourages risk taking which is beyond the bounds of what the competitor would normally have invested in - so the focus shifts from investing to speculating and in essence that is what a trader would do. So I believe that those people who speculate more are more likely to win the competition. So we need to be aware that if the competition allows for speculation and encourages it then we should not place restrictions on buying and selling orders - another scenario that could play itself out and we need to be aware of that is - I could sit in cash the entire year and then in December I pick one penny stock share when its price goes down and then wait out the month for the share price to move by even 1 cent and you would more than likely win the competition with a handsome return - if you are not convinced look at the leaders on the board currently to get my drift
So I would advocate that the rules of the competition be that you get your annual funds up front in January and you have the rest of the year to decide how you wish to allocate those funds to various counters. Then over and above that you may have as many purchases as you wish during a month ( you may want to take up small parcels of a share over time rather than going in, in a single purchase) but when it comes to sales maybe a restriction of only 2 sales per month are permitted, this will allow those who have made a poor investment decision to unwind their loss making shares, and then look to an alternative investment. There should not be a restriction on someone who sells a particular share, from, at a later stage, buying the same share again - this is nothing more than locking in some profits. This competition is over a year so buying and selling the same counter within this period puts one at risk of violating your tax status with SARS so we should ignore this aspect in the competition due to its short run period - if we end up running a competition like this over a 3 - 5 year widow I don't think we will attract many competitors and also it may start cloning the investors real portfolio - and I don't think I want to put my portfolio onto such a public forum as there may well be a couple of SARS lurkers around. So maybe we need to try and keep the competition as simple to ensure enthusiasm and interest and not clog it up rules and regulations. Also the competitors should be permitted to buy any share they wish but warrants, CFD's and SSF's and any other derivatives are excluded
So Patrick maybe what needs to happen is that all suggestions over the last 11 pages are summarized and then we can debate the outline and rudimentary rules of the competition for next year
