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I recently signed up for an investing competition at my school. The competition grants each competitor $1,000,000.00 (of virtual money), where we will be able to buy/sell any stock listed on the AMEX, NASDAQ, NYSE & OTC-BB. The competition lasts 4 months (starting December 7th), and the competitor with the highest returns by April 1st, 2016, wins.

Now, I consider myself a value investor (I have read the Intelligent Investor by Benjamin Graham, and I am a big fan of Warren Buffett). However, it seems to me that value investing is only appropriate for long term investing (i.e., 10 years or more). So, I am thinking that I am going to have to be using some other form of investing, and, unfortunately, I am not quite familiar with any other methods.

Does anyone have any suggestions/methods on how to get the highest return possible within 4 months by investing in stocks on the AMEX, NASDAQ, NYSE & OTC-BB?

(Just so you know, first place wins $3000, second wins $1000, and third is $500. Also, orders can be placed both long and short, but no leverage or options trading will be allowed.)

closed as too broad by Joe, JoeTaxpayer Nov 23 '15 at 21:40

Please edit the question to limit it to a specific problem with enough detail to identify an adequate answer. Avoid asking multiple distinct questions at once. See the How to Ask page for help clarifying this question. If this question can be reworded to fit the rules in the help center, please edit the question.

  • This seems to broad to me. Better would be to do some research, then ask about specific techniques. – Joe Nov 23 '15 at 18:51
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    What are the terms of the competition? Are you allowed to buy and sell? If so, at what price? For example, In my high school, my economics teacher created an arbitrage opportunity by letting us to buy at the low, sell at the high. But, the strategy for that scenario differs from if you are supposed to limit your purchases to the beginning. So, the particulars are important. – rcollyer Nov 23 '15 at 19:12
  • Just curious what the competition sets the transaction cost at? If they are high then the lesson is 'supposed' to be to not trade often. – Ross Nov 23 '15 at 19:42
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    Assuming there are a large number of participants and you will only win if you get a very large return and assuming there's no downside to you for losing "money" besides not winning the competition, I'd throw caution to the wind and invest in the riskiest high-potential-return out there. Probably you'll lose, but this competition is basically a gambling match anyway. Your only chance to win is by gambling. – Daniel Nov 23 '15 at 20:01
  • Keep in mind that you may want to consider doing nothing (or something super safe). If we have another mini-meltdown (like the one that happened a few months ago where everything dropped by like 10%) then you'd probably win if you just didnt invest anything since the time frame is so small. Also.... your school will give you up to $3k for this? I wish I went to your school... – David Grinberg Nov 23 '15 at 20:03
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What you're asking for is a short-term, large return investment. When looking for big returns in a short period of time, risk is inevitable. The more risk you are willing to assume, the higher your potential returns.

Of course, the flip is is that the higher your risk, the higher the potential to lose all your money!

Since this is an exercise for school (and not real money and not your life savings) your best bet is to "go big or go home". You can safely assume 100% risk!

Don't look for value stocks, dividend stocks, or anything that pays a steady return over a long period of time. Instead, look for something risky that has the potential of going up, up, up in the next few months. Are you allowed to trade options in your fake portfolio? Options can have big risk and big reward potential. Penny stocks are super volatile, too. Do some research, look for a fad.

In other words, you will most likely lose it all. But you get a little lucky, you could win this thing outright by making some risky investments. A 5% chance of winning $3000 vs 95% of going broke may be pretty good odds if everyone else is value investing for just a few months. You will need to get lucky.

Go big or go home!

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    Or he might be able to win just investing in an index and doing nothing :) Depends on the outliers that actually will pick correctly taking 100% risk. – Ross Nov 23 '15 at 19:43
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    For a contest like this, you either get the highest return or you get nothing. The only way to win at a contest like this is to choose investments with extremely high volatility. Suppose you don't. Then if several of your competitors pick high volatility investments, some will crater but some will get (by sheer luck) high returns, they will win, because your investment is nice an safe with a moderate return. In particular, diversification is not good, because it lowers variability. You want to put all your money on one dice roll, it's really the only chance to win. .... – user11599 Nov 23 '15 at 22:35
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    ...Too bad you can't get options or use leverage. That's the way to lots of volatility. Certainly only invest in a single stock to avoid diversification. Look for something on the verge of delisting (i.e. a pharmaceutical company that is about to hear whether the FDA approves its one patented drug), because these will have the highest volatility. – user11599 Nov 23 '15 at 22:44
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    So your advice Rocky, is instead of learning something from the process, just take caution to the wind and gamble. Wonderful advice. – user9722 Nov 24 '15 at 2:46
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    @Rocky, this is about more than just money. The prize money is just a bonus, what is important is the lessons learnt. If the OP can learn new techniques for successfully trading for profits, that may be a valuable lesson for life, which could be much more valuable than a few thousand dollar prize money. – user9722 Nov 24 '15 at 6:43
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Try using technical analysis, look at the charts and look for stocks that are uptrending. The dfinition of an uptrend being higher highs and higher lows.

Use a stochastic indicator and buy on the dips down when the stochastic is in the oversold position (below 20) and and crossing over about to turn back upwards.

Or you can also use the stochastic to trade shares that have been ranging between two prices (say between $10 and $12) for a while. As the price approaches the $10 support and the stochastic is in oversold, you would buy as the price rebounds off the $10 support and the stochastic crosses and starts rebounding back up. As the price starts reaching the resistance at $12 (with stocastic in overbought at above 80) you would look to sell and take profits. If you were able to do short selling in the competition, you could short sell at this point in time and make profits on the way up as well as on the way down.

There are many more techniques you could use to set up trade opportunities using technical analysis, so it may be a subject you could research further before the comptition begins. Good luck.

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Invest in an etf called SPXS and hope for a market correction in the next month. Or if you know a lot about markets and trends, select from this list of leveraged etfs available from Direxion.

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