Stock Market Game

Stock Market Simulation Instructions:

Go to: Marketwatch VSE Hall Franklin Econ game

(You can also do a search for VSE or Virtual Stock Exchange and MarketWatch; In “Find a Game” in the search box type “HallFranklinEcon” - all one word. You should see my user name (portiajanel). It is a normal difficulty level, private game.)

Create a portfolio; register using an email and password just for you. Please use your real names so that I can give credit.

Enter the Game Password; Constitution. (make sure it's a capital "C")

Please look over the game rules and begin choosing your stock purchases.

You can check back on your progress at anytime and make more trades until the end of the game on May 31st. The point of the game is to make as much money as possible. You will be ranked on how you do.

You can “buy” stocks or mutual funds. You will not be able to buy commodities (like in the movie) unfortunately.

To research stocks; go to http://finance.yahoo.com/; http://money.msn.com/stocks/; http://www.marketwatch.com/investing/research-tools; etc.

On this page you will see the indices of the stocks listed, recent news, how to reach different brokerage houses, expert predictions about rising stocks, big movers in today’s trading, etc.

In the “get quotes” box at the top you can type in a stock symbol (the abbreviation that the stock market uses to label a company) or a company name. Go to a company that is traded at a stock market inside the United States. (Example; NKE for Nike)

You can see how that stock has been trading for that day and watch the price go up and down during today’s trading. On the right side you will see a line graph showing how the price has changed over the day. Click underneath to see how that stock has performed over the last 5 days, 3 months, 6 months, 1 year, 5 years, and however long that stock has existed.

Remember that you are trying to pick a stock that you are predicting the stock will rise between now and May 31st and so you may look at how that stock has performed during May in past years, or if there are recent news events that mean that the stock will go up.

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Explanation of climactic scene

With the authentic orange crop report indicating a good harvest of fresh oranges, frozen concentrated orange juice (FCOJ) would be less important to food producers and so would be likely to drop in price once traders heard the news. However, by way of a fraudulent report, the Duke brothers are led to believe that the orange harvest would be less successful, necessitating greater demand for stockpiled FCOJ in orange products in the coming year, thereby driving the price up. By capitalizing on this knowledge (and the Duke brothers' missteps) the protagonists are able to profit by manipulating the futures market as follows:

• Unlike a conventional stock transaction, futures contracts can be sold even when the seller does not yet own any of the commodity. A contract to sell, for example, 15,000 pounds of FCOJ in April at $1.42 per pound, merely indicates the seller's obligation to deliver and the buyer's obligation to purchase the product at the specified price and time. It does not matter how or where the seller gets the product, as long as, one way or another, he is able to deliver it at that price at that time, even if it results in a sale at a loss to him.
• In this case, Winthorpe and Valentine first sell FCOJ futures at $1.42 per pound, a price inflated by the Dukes themselves. (The Duke Brothers' buying leads other traders to believe that the Dukes are trying to corner the market, causing a buying frenzy.) Then, when the price falls — first as a result of Winthorpe and Valentine's eager selling, then to a much greater degree upon the release of the real crop report indicating a good harvest — Winthorpe and Valentine buy futures for prices between $0.46 and $0.29 per pound. Thus, for every futures contract they had previously sold at about $1.42, they buy another back (for resale to those who bought the expensive contracts from them previously) for only $0.46 to $0.29, resulting in a profit of $0.96 to $1.13 per pound.
• Though it is not stated in the movie exactly how much they make, if they invested roughly $500,000 from a combination of Winthorpe/Valentine's investment, the Dukes' money from buying the "fake" report from a fake Clarence Beeks, and Coleman's and Ophelia's savings, they would have turned it into over $10 million. It is strongly implied that they purchased additional futures on margin and made dozens (or hundreds) of millions more, since a lesser amount would not bankrupt the Dukes.
• At the same time that Winthorpe/Valentine sell their futures contracts, the Duke brothers are rapidly purchasing them, even at high prices, because they incorrectly expect that the crop report (falsely suggesting a greater need for stockpiled orange juice) will create a demand at even higher prices, securing them a profit. When it turns out that the leaked report they were given was fraudulent and the true report is revealed, the price begins to plummet before they are able to sell off their contracts. This leaves them with an obligation to buy millions of pounds of FCOJ at a price more than a dollar per pound higher than they can sell them for, bankrupting them.