Throw yourself into the sharemarket risk-free and learn what it’s about.
Australians are renowned for being real estate obsessed. What’s less recognised is we’re equally enamoured with shares.
“Around 36 per cent of Australians directly own shares,” says Joe Dickson, delivery, content and operations manager in the marketing division of the Australian Securities Exchange (ASX).
“That’s higher than comparable countries, including the likes of Germany and the US. When governments have been privatising assets or organisations demutualising, the figure has climbed to over 50 per cent.”
Learning how to trade
There are innumerable books, articles and seminars promising to teach people how to trade shares. But ‘Sharemarket Game’ carries the imprimatur of the ASX, costs nothing and offers an experience as close to reality as is feasible. First launched 40 years ago as a way to educate schoolkids on how the sharemarket worked, it went online in 1998.
It has only one domestic competitor, StockWatch. Unsurprisingly, there’s a wider selection of Wall Street-focused games. Such as Investopedia’s Stock Market Game, Wall Street Survivor and the Mobogenie app.
The Sharemarket Game is free and runs for a set 15 weeks, you can create leagues to play against friends or workmates.
ASX now runs two versions, one for school students and one for the general public, twice a year. The next rounds start on March 9 for students and February 23 for the general public. Players are credited with a virtual $50,000 to buy and sell shares in 200 companies listed on the ASX over 15 weeks.
Live prices of shares are used and players have to pay a brokerage fee (i.e. the fee stockbrokers charge clients to buy or sell shares). While nobody loses any actual money, the top three players in both versions of the game win a real cash prize (first prize is $600 for students, $2000 for adults).
Dickson says the Sharemarket Game, which he oversees, does more than just teach people the mechanics.
“People learn a lot about themselves, even though they’re not playing with real money,” he notes. “They get an understanding of how much research work is required to be successful. They also discover how they react emotionally when their shares go up or down and work out what their risk tolerance is.”
Around 30,000 young Australians, mainly those in year 10 studying business-related subjects, sign up to play the student game whenever it’s run. With the adult version, the figure is around 27,000.
“The gender split with the game remains stubbornly 70 per cent male, 30 per cent female even though with real-world share trading it’s a 57:43 per cent ratio,” Dickson says.
“We don’t have data on players’ income or educational qualifications. The two big demographic bulges are those 18-29 and 50-59. The former are used to playing online games and, presumably, interested in starting to accumulate wealth. I suspect the latter have, or plan on having, a self-managed super fund and want to learn about investing in shares for that reason.”
People are free to take part in the game as many times as they wish. That means players can range from neophytes hoping to learn the ropes to experienced share traders road-testing strategies.
While the ASX devotes significant resources to its game with the aim of encouraging more Australians to play the sharemarket, there’s no pressure on players to do so.
“When we’ve surveyed players, 90 per cent say they intend to play the game again,” Dickson says. “Fifty per cent say they’re going to continue to monitor the [virtual] portfolio they built during the game. Only 20 per cent say they plan to start trading on the live market.”
Virtual success, real-world results
His experience with the Sharemarket Game has been life transforming for Advait Joshi. He played the student version while he was in years 9, 10 and 11. He moved up to the adult version in 2015 after turning 18 while he was in year 12.
He didn’t win first prize that year but he did in 2016, after generating a 44 per cent ($22,353) return. While still in his first year of university, he was offered a cadetship in the equity analyst team at UBS. He is now hoping to start a managed investment fund while completing his studies.
Joshi puts his success down to doing his homework and sticking to his investment strategy.
“I spent about an hour a day reading Bloomberg News, staying updated on where the global economy was going and trying to find stocks that might be undervalued in the current market,” he says.
“I mainly invested in companies with solid fundamentals, looking at things such as price-earnings ratios that were trading substantially lower than their historic levels.”
It was an approach Joshi only deviated from when the person coming second in the game pulled within $3000 of his lead.
“I panicked and diverted from my strategy, losing a lot of money,” he says. “I tried investing in stocks I thought would ‘ride the market’ rather than those I thought had solid fundamentals. That was silly.”