Lock, Stock & Management Game(A rare game)

I wanted to write this Blog a long time ago, but my exams took the toll. I happened to visit the Lock Stocks & Trade(LST) Competition in Great Lakes Institute of Management Studies(GLIMS, Chennai). I got the intimation pretty late after the Participation date was closed. (Apparently the mail went to my Spam Folder) So, I had to settle down as an Investor in the Competition.

About LST:
                 The Lock, Stock & Trade is all about the way Stocks & Trade work. It is a mock of the Stock Market & the Companies. If you are a company(Participant of the LST), then you will have to present your company's profile tempting the investors to invest in yours. If you are an investor, invest in the company that you have faith in & multiply your initial investment. Finally, the company with the Maximum worth is declared the Winner, while the Richest Investor after having multiplied the money is the Best Investor. Its like finding the Reliance & Warren Buffet from the competition.

                The good thing about the Game was that, it introduced students to the world of  Stocks & Shares. I have explored this world in my teenage by reading the Motley Fool books. Having anticipated to put that into action, I found this the best way to test my Investment Instincts.

Travel:
         I was happy to travel with the MBA First Years to explore their knowledge & perspectives. Being an Engineering student I wanted to know how they think & make that into action. Got onto the bus, & found myself sitting next to a few MBA girls. As usual, I started yapping & found myself a few more friends. The travel was interesting & fun filled.

The Event:
        Every 'investor' was given with Rs.50,000 each & will have to invest in 9 Competing companies having 4000 shares each. The Participants, looks like, interned with Real Time companies to pitch as the Companies. But, I must admit, the choice of companies were odd. I would say a few companies were just not the sort becoming 'Public'. But yet there were a very few choices as well. The Company's ultimate aim is to attract most of the investors. The investor's point is to make a lot of money out of his investment, of-course. The investor will have to quote the right amount guessing on the demand rate. The Initial Public Offer (IPO,Opening Share Value) is decided by the least bidding value quoted by the 4000th bidder in the order of decreasing Share Quotations. For example, the company "Wow" gets bidding from investors from Rs.450 to Rs.150, then it starts giving shares from the Rs.450 bidder & if the 4000th share is given to a bidder with Rs.300, then that Rs.300 becomes the IPO  & all its 4000 shares will be sold at that Rs.300. If one bids at Rs.400, then the remaining Rs.100 goes back to your a/c.


The Trick to win as an Investor:
          From an investor's point of view the trick was simple: Quote the right value to the right company with non-divergence i.e. 

• Limit the number of companies you invest. Investing in too many companies is not applicable for faster growth as that may lead to lowering the chances of multiplying your shares & value. Imagine you get 5 shares in 5 companies & only one of them fairs well. Then the profit is felt equivalent to only 1 share. But if you invest in 1 company & if that company fairs well, then the profit is in all 5 shares & hence the growth is faster. The amount of risk involved is greater, but to decide that 1 company, one needs to be a good analyser.
• Quote the right share value: Don't quote it too high nor too low. If you quote a larger value, then your multiplying factor becomes less. Like in the case of a Rs.400 investor: He invests 400 for a 300 rupees share. For 400 he would have quoted lesser number of shares than possible with Rs.300 (Say for 400 you get 15 shares but for 300 you get 25 shares. If one shares value increases by Rs.10, then its a Rs.250 gain for the 300 investor compared to Rs.150 of 400 investor. If too low, you would not get the share at all.
• Finding the right company: In a normal Stock market investment, one would look into factors like Management team, resources, Capital, the sustenance of the company, etc. But for this competition, you will simply have to find the 'Company' loved by all. You just have to find the company into which everybody would invest on. The factors like Smartness, answering capability, etc will decide. (Sometimes even a good-looking girl in a team will make a difference!!) 
• The correct Quoting amount would have to be the average of the extreme values (guess) that could possibly be quoted. I guessed that the Rs.300 & the Rs.150 will be the extreme calls and quoted all companies at around Rs.225.

                    After all such calculations & investments, Guess what happened? I ended up getting into the top investors list ending up understanding a lot more on Stocks & shares. If you find an LST program near-by, don't forget to participate & get the experience. Try having the above points in mind while you play LST. Someday, you would start investing & then you'll understand how LST helped you!