The Stock Portfolio Game

J. Rene Villalobos - rene.villalobos@asu.edu
Department of Industrial Engineering, Arizona State University, PO Box 875906, Tempe, Arizona 85287

Abstract

One of the objectives of the stock portfolio game is to introduce undergraduate engineering students to the application of optimization techniques for stock portfolio selection. Ideally students playing the game would have basic background in linear algebra, calculus, and statistics. The general idea of the game is to present teams of students with real historical performance data for stocks with different levels of returns and variability so that they make decisions concerning the allocation of limited funds among these stocks. The game is played in four rounds within an hour-long session. The teams, comprised of no more than four students, are provided with an initial virtual investment fund, which they have to allocate or reallocate based on the information presented. The team with the most money in its investment account at the end of the game is declared the winner. Once the results of the game are known, one or more teams are asked to share their investment strategy with the rest of the group. This discussion forms the starting point for the last part of the session when the lecturer puts the investment game in the perspective of an optimization problem. At the end of the session basic principles of Markowitz's portfolio theory are presented and applied to the data given to the students.

Download the PDF
10.1287/ited.8.1.41

Citation Information
Villalobos, J. R., 2007. The Stock Portfolio Game. INFORMS Trans. Ed. 8(1) 41-48. Available online at http://ite.pubs.informs.org/.

DOI: 10.1287/ited.8.1.41