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Author Topic: investor challenge  (Read 336786 times)

tgg78703

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investor challenge
« on: April 23, 2013, 09:58:58 pm »
these competitions have always had a issue in the past where someone buys shares that are not very liquid, e,g . If I had bought selco with all my money I would be 131% up today.

but that not be a true reflection as they hardly trade and there would be no hope of me selling or realising my profit.

Should you not have a cap on purchases related to the shares average volume
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Patrick

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Re: investor challenge
« Reply #1 on: April 24, 2013, 08:41:53 am »
Thoughts from the rest?

How often would you be able to do this?
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Krypt0n1te

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Re: investor challenge
« Reply #2 on: April 24, 2013, 10:15:31 am »
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.
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Aragorn

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Re: investor challenge
« Reply #3 on: April 24, 2013, 10:41:16 am »
It would be beneficial to only be able to trade in liquid shares, but that would bring on extra admin on the part of Patrick who would need to maintain a list of liquid shares as opposed to a feed of all shares - same with suspended items. This could then become a daily task and I believe a waste of effort. I don't believe that those who will only buy into illiquid stocks will see a continual rise in value over a year - i.e. attempt to get bragging rights by winning the competition.
I second Krypt0n1te in what he states regarding measuring oneself against ALSI. It may be a competition, but I feel its against yourself (your current actual investment activities) vs what you could have done.

And 85 punters entered so far - well done.
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Stefanmuller

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Re: investor challenge
« Reply #4 on: April 24, 2013, 11:42:43 am »
Quote from: Krypt0n1te on April 24, 2013, 10:15:31 am
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.
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Patrick

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Re: investor challenge
« Reply #5 on: April 24, 2013, 12:34:10 pm »
Quote from: Stefanmuller on April 24, 2013, 11:42:43 am
Quote from: Krypt0n1te on April 24, 2013, 10:15:31 am
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.
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Stefanmuller

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Re: investor challenge
« Reply #6 on: April 24, 2013, 01:16:51 pm »
Quote from: Patrick on April 24, 2013, 12:34:10 pm
Quote from: Stefanmuller on April 24, 2013, 11:42:43 am
Quote from: Krypt0n1te on April 24, 2013, 10:15:31 am
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.


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Patrick

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Re: investor challenge
« Reply #7 on: April 25, 2013, 01:22:34 pm »
Quote from: Stefanmuller on April 24, 2013, 01:16:51 pm
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.

Ah thanks for that! Maybe I should consider allowing sales for a loss then! I'll see. By next year we should all have a good idea as to the best format, this was just how I thought it should run for now.
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tgg78703

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Re: investor challenge
« Reply #8 on: April 25, 2013, 10:32:08 pm »
Maybe you should consider a sell option, any prudent investor will get out of the market if the tide turns and we have a 2009 all over. Or a certain sector that  is invested in makes a major dive.

The competition is only till december so it not like it is actually investing long term. You have long term shares , medium term shares and short term shares. For investor status  you will have to run it for 5 years.

Allow one sell of total holding in a share.

Also a thing to consider is the diff between buying and selling price. There are some shares that have almost a 10% diff. So I would suggest is that when your competition closes all investors are allocated the last price they could sell their shares for and not the last trade price. There are some small caps bought that be manipulated



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Patrick

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Re: investor challenge
« Reply #9 on: April 26, 2013, 11:13:14 am »
It seems there is more support for selling than not selling, so most likely that'll happen next year as I don't want to change the rules during a comp run. There could be quite a lot of changes, let me know if you have more ideas. I may have a vote on a couple of topics later.
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gcr

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Re: investor challenge
« Reply #10 on: April 26, 2013, 01:04:03 pm »
If you allow for sales then I think it goes against the grain of the competition which is an "investment competition" and the very essence is to remain in a particular counter for the longer term rather than trying to turn this competition into a trading operation. If the tide turns because of a broad pull back chances are that it will affect all investors in the competition across the board. If one looks at the shares chosen by investors some have tried to pick penny shares with a view to making significant gains - but this is only likely to happen over the short term - so its a case of - you pays your money and you reap what you sow. If you do allow sales then maybe you should restrict it to only one sale a month - this could create an admin nightmare for yourself, and similar fees must be imposed as for buying of shares
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Patrick

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Re: investor challenge
« Reply #11 on: April 26, 2013, 01:32:11 pm »
Quote from: grahamcr on April 26, 2013, 01:04:03 pm
If you allow for sales then I think it goes against the grain of the competition which is an "investment competition" and the very essence is to remain in a particular counter for the longer term rather than trying to turn this competition into a trading operation. If the tide turns because of a broad pull back chances are that it will affect all investors in the competition across the board. If one looks at the shares chosen by investors some have tried to pick penny shares with a view to making significant gains - but this is only likely to happen over the short term - so its a case of - you pays your money and you reap what you sow. If you do allow sales then maybe you should restrict it to only one sale a month - this could create an admin nightmare for yourself, and similar fees must be imposed as for buying of shares

My thinking was either one of two things, a) only allow selling at a loss (ie avoid the tax-man's definition of trading), or b) running two parallel leaderboards. One for traders and one for investors. If someone sells at profit they are automatically marked as a trader.

There's still a few months to iron this out so I'm sure we'll find something that works. My goal with this website was an education into investment, so I really didn't want it to be a trading contest. I feel investment is something South Africans don't think about enough, and even more so when it comes to equity investment, the best performing class.
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gcr

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Re: investor challenge
« Reply #12 on: April 26, 2013, 01:44:34 pm »
Agree with your sentiments - it serves little purpose bringing a trader mindset to an investment scenario
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Orca

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Re: investor challenge
« Reply #13 on: April 30, 2013, 05:25:07 pm »
I just had a bright idea over a cold one. To limit competitors that punt their Grand Parents, Parents, Siblings and other elderly people's pension money into a Penny Stock gamble, the lowest 20% of the entrants must pay Patrick R150.00 at year end. Most of them will be here anyway. Then Patrick can pay the winner 10% of the takings. 
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Moonraker

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Re: investor challenge
« Reply #14 on: April 30, 2013, 08:15:39 pm »
Quote from: Patrick on April 26, 2013, 01:32:11 pm
My thinking was either one of two things, a) only allow selling at a loss (ie avoid the tax-man's definition of trading), or b) running two parallel leaderboards. One for traders and one for investors. If someone sells at profit they are automatically marked as a trader.

There's still a few months to iron this out so I'm sure we'll find something that works. My goal with this website was an education into investment, so I really didn't want it to be a trading contest. I feel investment is something South Africans don't think about enough, and even more so when it comes to equity investment, the best performing class.
I think, selling at loss before the 3 year rule, will mean that one can't offset that loss against a capital gain. I say this because the annual exclusion rate  for instance, applies to both gains and losses i.e. cuts both ways, and so I assume would the 3 year rule.
Can anyone confirm ?
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