This report will be discussing various aspects of the semester-long Investopedia simulator
that I have undertaken. You begin with a starting fund of $1,000,000, with the requirement of a
minimum of 5 trades and a 12-week trading period. However, I opted to do weekly trades as I
saw this as an opportunity to test my abilities in choosing profitable stock by examining and
analyzing real-life scenarios such as the decline of the travel industry. Covid-19 severely
impacted the stock market, and what made this simulation even more interesting was seeing if
your predictions regarding the effect of the pandemic on stock prices were accurate or not. I have
attempted to create a diversified portfolio by purchasing a variety of stocks in different
industries, but I was not completely able to diversify away systematic risk, hence, my account
value at the end of simulation was slightly lower than the initial account value I started with.
Figure 1: Profit/loss of Account.
Profit/Loss
$1,050,000.00
Account Value
$1,000,000.00
$950,000.00
$900,000.00
$850,000.00
$800,000.00
$750,000.00
Date
2
As can be seen in the above chart, I started the simulation quite steadily, with my
portfolio reaching its highest value on the 16th of September at $1,012,340. After the tip of the
iceberg, came the downward slope. Throughout the following couple of weeks, my account
began to constantly decrease in value until it reached the lowest point, with the account value
being $861,093 at the beginning of October. However, the account value began gradually
increasing until the end of the simulation, to end with an account value of $980,958. (figure 1.2)
My goal like any other trader was to achieve an abnormal return from the purchase and
then the sale of the assets in my portfolio. Moreover, I set a goal at the beginning of the
simulation to try and achieve a diversified portfolio, therefore, I always aimed to have at least 15
stocks in my portfolio from companies from different industries and different sizes. However, I
realized that my goals need to change after a massive dip in account value between the 12th-14th
of October. My goals shifted from making a profit, to cover my losses. Along with the change in
goals, my focus on the stocks that I was looking to buy changed. At first, I displayed bullish
behavior as I was hopeful for an overall upward trajectory for the medical industry, with the
possibility of the production of a vaccine. Additionally, I was expecting an unlikely quick
recovery in the airline industry which did not happen, hence, the aforementioned resulted in the
changing of my goals from making a profit to minimizing loss as I then decided to play it safe
and purchase reliable stocks such as TSLA, and GOOGL.
In terms of trading strategy, I did not have one, to begin with. Upon doing some stock
market research and learning about how the stock market works, I learned that the most
important thing is to have a diversified portfolio. Hence, I built my portfolio based on the
diversification of systematic risk and the thriving medical industry, which is dealing with a
pandemic. However, if I was to repeat the simulation, I would have spent much more time
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applying technical and fundamental analysis techniques to the stocks that I would be purchasing
to formulate a decisive trading strategy. My inexperienced opinion on the stock market along
with a variety of cognitive biases that impaired my decision making, made me believe that
purchasing a variety of Pharmaceuticals was the perfect way to start the simulation. My strategy
at first revolved around the Pharmaceutical industry, as I believed that the pandemic would result
in major investments in the pharmaceutical industry, along with the possibility of the
manufacturing and distribution of the vaccine before the end of the simulation.
My initial purchases consisted of stocks from the automotive, airline, and pharmaceutical
industries. The purchase of Tesla stock was a no brainer, this is due to Tesla being on track at
that period to overtake Wall Street's earning expectation, while the stock's price has been rapidly
increasing since March. Additionally, upon doing some extra research I stumbled upon what is
known as defensive stocks, and their uncyclical nature. As in the industry is not very much
affected by the change in economic conditions. Therefore, I believed it was integral that my
portfolio consists of such stock, hence, I also purchased 500 Dollar General stocks, which
continued to rise until the end of the simulation. The beginning of my downfall came as a result
of purchasing approximately $160,000 of Delta Airline stocks, which was very rash of me as it
did not recover as well as I predicted. After spending roughly $340,000 in pharmaceutical stock
such as AstraZeneca (AZN) and Abiomed (ABMD) only to lose $120,000 in account value by
the 2nd week of October, I decided I needed to change my initial strategy and take a safer and
more reliable approach to the stocks I purchase. However, due to the optimistic person I am, I
did not sell the pharma stock, but decided to hold, as I believed its performance will improve
sooner, or later.
4
While doing some stock market research, I noticed a trend where than been a large
increase in the value of tech industry stock. Which makes sense due to increased utilization of
technological application and software, as a result of the pandemic and inability to physically
meet. I diverted my focus to the tech industry while also keeping an eye on the pharmaceutical
industry. I purchased stock such as Zoom (ZM), Google (GOOGL), and Spotify (SPOT). Zoom's
stock has been surging since the beginning of the pandemic due to the increased need for video
communication personally, jobwise, and academically. Moreover, it is always safe to assume that
GOOGL stock will perform well, therefore, I believed that adding it to my portfolio was integral.
The purchase of Spotify stock came from some personal research, as with the release of new
podcasts on the music platform such as the Joe Rogan Experience, Spotify's stock experienced a
major in price, reaching up to a 60% increase, which is the equivalent of adding $20 billion to
the company's value. The change in strategy slightly helped at first, but then I was surprised once
the account value has dipped again to $863,700 by October 1st.
In my opinion, my portfolio was not yet diversified enough, therefore, was easily affected
by systematic risk. Hence, during the 1st week of November, I purchased large amounts of
AAPL and WMT stock, to hedge the systematic risk of my portfolio. Additionally, it was during
this time that positive news that we're on the verge of the successful manufacturing of a feasible
vaccine, therefore, I purchased stocks of Pfizer (PFE), Benitic Biopharma (BNTC), and Moderna
(MRNA). After this latest purchase, my account value displayed a quick increase, reaching
approximately $960,000. I then focused on offloading undesired Pharma stock such as REGN
and ABMD, as I now considered them to be a lost cause. My portfolio then seemed to be
gradually increasing up until the end of the simulation, to cap off at an account value of
5
$980,000. I believe that if given one more, I would have crossed the one million mark, as Pfizer
has just announced the manufacturing and international distribution of a vaccine.
Throughout the simulation, I have held 17 different stocks in the automotive,
technological, retail, music, and pharmaceutical industry. However, it was easy to see which
stocks benefited my portfolio and which did not by looking at figure 1.1. GOOGL was the best
performing stock in my portfolio, as I purchased 100 stocks for a price of $1573/stock and later
sold it for $1740. I decided that having Google stock in my portfolio was essential, this is due to
their main source of revenue being digital ads, and with the world being in lockdown; I assumed
that their ad revenue will significantly increase. Additionally, Tesla stock performed exquisitely.
I purchased their stock for a total cash value of $340,000 then later sold them for approximately
$370,000. The reasoning behind the addition of Tesla stock to my portfolio was nothing complex
or intricate, I simply believed that their momentum would continue along with a huge number of
investors that believed the same. Moving on, Dollar General was a fine choice of stock to
purchase due to it being a discount retailer, as I did not expect the pandemic will affect the stock
price adversely, quite the contrary, as by the end of the simulation the price of the stock has
increased by $14/ stock, while I was holding 500 stocks in my portfolio. The following
pharmaceutical stocks performed exceptionally well: ZLAB, ABMD, and MRNA. However,
MRNA was the best performing stock, with a total capital gain of $15/stock. While ZLAB and
ABMD stock prices increased by $7 and $6 respectively. I purchased the aforementioned
pharmaceutical stock due to the ongoing pandemic; I believe that with all that is going on, you
must expect increased business activity in the healthcare industry, along with the possibility of a
vaccine makes the pharmaceutical stock, a lucrative investment. Furthermore, after a turbulent
period, Delta Airlines managed to hold on to its gain and was sold for approximately $38/share,
6
while it was bought for $34/share. I excepted an increase would occur as the travel industry
would start recovering after the worldwide lockdowns came to an end. Lastly, Western Digital
Corporation (WDC) is the final good performing stock. Where it experienced a $4 increase in its
stock price between September and November. I purchased WDC stock as a means of
diversifying my portfolio. When examining their historical information, I noticed a trend
whereas every week the stock reaches a new high, therefore, was exhibiting bullish behavior.
The worst performing stock on my portfolio was surprisingly, Zoom. Their stock price
decreased from $559/stock to $414/stock by the time I sold it, which caused a loss of
approximately $73,000. The reasoning behind the purchase of Zoom was due to the massive
increase in users, while also having an upward momentum. However, I believed I jumped on the
bandwagon too late and the price quickly declined from thereon. The next worst performing
stock was Walmart as their stock suffered a $27 decrease, which resulted in a capital loss of
approximately $27,000. I purchased Walmart as it is known to be a defensive stock, which does
not get affected by changing economic conditions, due to them selling consumer staples. Yet, the
stock price decreased even towards the holiday season. Qurate Retail (QRTEB) was another
stock that gave my portfolio a huge blow, as my portfolio suffered a capital loss of around
$22,000. The reasoning behind it was that they have just experienced a serious decrease in stock
price, and I believed that it could not go any lower. In our final chapter, I realized that this was a
simple case of Gambler's Fallacy. The next worst performing stock was Walmart as it suffered a
$27 decrease, which resulted in a capital loss of $17,000. I purchased Walmart as it is known to
be a defensive stock, which does not get affected by changing economic conditions, due to them
selling consumer staples. Yet, the stock price decreased even towards the holiday season. Spotify
(SPOT) was another disappointment, despite the significant increase in the stock price as a result
7
of the integration of the Joe Rogan Experience, I believe I held on to it for too long. I purchased
a total of 500 Spotify stock for approximately $263/stock, which was later on sold $251 each.
The following Pharmaceutical stocks performed badly: AZN, REGN, PFE, and BNTC. The
losses from these stocks canceled out any capital gain I have received from the profitable Pharma
stock. REGN suffered the largest decrease in price at $11/stock. While the other experienced an
average decrease in price of $1.5/stock. I bought these stocks on the same basis as the other
Pharma stocks, as I expected them to perform increasingly well based on my research. Finally,
AAPL was supposed to be one of the star assets in my portfolio, as they have a loyal customer
base that constantly buys their latest products. The stock price decreased slightly to
$117.59/stock at the date of sale, from $118.
I feel privileged to have taken a class that allows us to experience that true nature of the
stock market, and hopefully will continue using the simulator throughout the years. After
completing this course, I can look back at the decisions that I have made and learn from them.
There were a variety of factors that enabled me to achieve profit, such as I keep myself up to date
with the latest stock market news, therefore, I was able to purchase Tesla stock early on and
make a significant capital gain. Moreover, I recalled learning about diversification in this class,
hence, I knew that I should not throw all my eggs in one basket. Additionally, upon doing my
research I learned of something that is known as defensive stocks, which are stocks that are not
impacted by the overall state of the stock market. Therefore, I purchased stock such as Dollar
General and Walmart which sell consumer staples. I believe that critical thinking is also a factor
that is integral in achieving an abnormal return, as I was able to make a connection between reallife and the stock market. Thus, I focused a large part of my attention on Pharmaceutical stocks
which I believe would have even increased further if the simulation had not ended. Likewise, I
8
noticed that the further we progressed into the course material, the more I was able to understand
the stock market.
On the other hand, some factors negatively affected my performance in this simulation.
The largest factor was my inexperience, as in the first few weeks of the simulation I did not
conduct enough research to be able to make a sound decision. For example, once Spotify stock
began to rapidly increase, I believed that this momentum continues and held on too long onto the
assets, therefore, ended up losing money on Spotify while it should have been a very successful
stock transaction. Additionally, I purchased Qurate Retail stock right after they received a
massive blow in their stock price, believing it could only go up from there. However, it
continued to decrease and resulted in a loss of $22,400. I learned that I had multiple cognitive
biases, such as herd mentality, confirmation bias, and overconfidence. All in all, there haven't
been a lot of negative factors, yet I believe that after completing this course I am better prepared
in dealing with the stock market and that the biggest factors that resulted in my loss was my lack
of experience and to some extent, knowledge of the stock market.
When it comes to my trading strategy, it is fairly easy to see how faulty it was. I should
have spent much more time planning my trades, rather than simply conducting some research
and jumping into the market. I believe that I spent quite heavily on Pharma stock based solely on
the hunch that the ongoing pandemic and the necessity of a vaccine will increase the prices of
Pharmaceutical company stocks. It was good and bad, some stocks proved my prediction to be
correct, but was canceled out by the losses that the other Pharma Stock incurred. Afterward, I
decided to change my approach and shift some of my focus to other industries such as the
automotive industry, tech industry, and retail industry. This change in strategy enabled me to
create large profits in my trading, as I made approximately $75,000 from Tesla stock and a
9
capital gain of $25,000 from Google stock which brought me back to an account value of
$980,000. Moreover, if I had another chance at this simulation, I would have purchased ETFs as
it was expected of the index to begin rebounding to pre-covid levels.
In conclusion, I have learned an array of investment tools and techniques that I will be
able to utilize in the future in my endeavors in the stock market. This simulation helped me learn
that it is essential to do thorough research before trading. I am now able to apply technical
analysis techniques such as candlestick charts and support & resistance to look into historical
price information and detect patterns and/or trends. I can use fundamental analysis and discount
values of future expected cash flows to get an accurate idea regarding the pricing of stocks. I also
learned that it is important to be able to critique yourself and take a step back, as you may be
unaware of the cognitive biases that are impacting the integrity of your decision making. With
this being my first interaction of any sort with the stock market, the trading simulator provided
me with the cornerstones that I would require to have as an investor one day and will continue to
build upon it. I am not disappointed that my account value is lower than what I began with.
However, I am happy that I have learned from my mistakes, and now realize that establishing a
versatile and well thought of trading strategy is the key to success.
10
Figure 1.1: Profit/loss of each stock in my portfolio.
Stock
Quantity Purchase Price Sale Price Capital Gain/Loss
TSLA (Tesla)
750
$402.81
$503.50
$75,517.50
DG (Dollar General)
500
$196.97
$211.36
$7,195.00
DAL (Delta airlines)
5,000
$33.97
$37.80
$19,150.00
QRTEB (Qurate retail)
5,000
$14.00
$9.52
-$22,400.00
AZN (AstraZeneca)
2,000
$54.94
$53.57
-$2,740.00
WDC (western digital corp)
600
$38.45
$42.78
$2,598.00
ABMD (Abiomed INC)
900
$263.91
$269.80
$5,301.00
ZM (Zoom)
500
$559.82
$414.05
-$72,885.00
GOOGL (Alphabet Inc)
150
$1,573.00
$1,740.00
$25,050.00
REGN (Regeron Pharma)
150
$580.00
$568.92
-$1,662.00
SPOT (Spotify)
500
$263.71
$251.00
-$6,355.00
AAPL (Apple)
1,350
$118.00
$117.59
-$553.50
WMT (Walmart)
1,000
$144.36
$117.59
-$26,770.00
PFE (Pfizer)
1,000
$38.28
$36.60
-$1,680.00
BNTC (Benetic)
10,000
$3.05
$2.88
-$1,700.00
MRNA (Moderna)
500
$85.18
$100.77
$7,795.00
ZLAB (Zai Lab)
500
$98.00
$104.99
$3,495.00
11
Figure 1.2: Weekly Account Balance
Week
Account
Balance
1
2
3
4
5
6
7
8
9
10
11
12
13
$1,000,000.00
$983,195.00
$1,012,340.00
$969,569.00
$965,749.00
$963,219.00
$881,229.00
$969,348.50
$974,996.00
$887,163.50
$903,129.00
$955,656.50
$980,958.50
DATE
TRADE TYPE
SYMBOL
QUANTITY
TARGET PRICE
PRICE
COMMISSION
TOTAL CASH VALUE
ACCOUNT VALUE
2/12/2021 11:44 AM
Stock: Sell at Market
CSCO
600
$47.09
$28,254.00
$999,678.50
2/12/2021 11:43 AM
Stock: Buy at Market
COHR
50
$260.98
$13,049.00
$999,717.00
2/12/2021 11:42 AM
Stock: Buy at Market
ENPH
100
$202.60
$20,260.00
$999,717.00
2/5/2021 9:58 AM
Stock: Buy at Market Open
IBM
500
$121.00
$60,500.00
$999,994.00
2/5/2021 9:58 AM
Stock: Buy at Market Open
CSCO
600
$47.57
$28,542.00
$1,000,000.00
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