Students at Brigham Young University hustled to maximize profits and minimize risks as they traded shares using the same high-tech, fast-paced and unpredictable stock market simulation used to train brokers at Goldman Sachs.
“The market moves very quickly, and you need to anticipate things before they happen,” says Brian Ames, a senior from North Ogden, Utah, majoring in finance. “It’s a lot less stressful when it’s not real money.”
In a large computer lab at BYU March 29-30, the simulation connected 20teams in a network of mutually dependent traders. Each team was free tocall any other team — or yell across the room — and offer to buy orsell fictional shares of various companies’ stock.
Participants negotiated, maneuvered and at times shouted their way through the computerized simulation, officiated by London-based ACF Consultants, Ltd., which also uses the program to train new brokers on Wall Street. Ames and his teammate, Sijin Chen, a doctoral candidate in mathematics from Beijing, led the pack with more than $1 million in profit after the first day’s closing bell.
“We lost the first two rounds,” Ames says. “But we finally figured out that, as you help other people trade, you make money, too.”
Like the real world, the stock prices responded to the behavior of the traders in the room. The teams’ valuation of the stocks also responded to a fictional news feed updated periodically by an ACF facilitator. The competition tested the students’ abilities to create markets for their stocks, manage their risk responsibly and ultimately turn a profit.
“In the investment banking world, most students know about mergers and acquisitions, but few appreciate the opportunities for lucrative and exciting careers in capital markets,” says Kim Smith, managing director of the Peery Institute of Financial Services which sponsored the exercise. “This event is a really fun and competitive way to expand their horizons.”
Eighty students with majors as diverse as economics, finance, accounting, mathematics, statistics, strategy, physics, international relations, management, organizational behavior and classical studies participated.
Between rounds of trading, students received training on pertinent financial concepts, including risk management, and how to use currency exchange rates and foreign bonds to help them respond more strategically to the simulation’s dynamic threats and opportunities.
After a briefing on foreign currencies followed by a 30-minute trading session that tested participants’ ability to respond to fluctuating exchange rates, ACF facilitator Tim Bartlett told the students, “To have just grasped the concept of foreign exchange like that, you should give yourselves a big round of applause.”
The Marriott School of Management has nationally recognized programs in accounting, business management, public management, information systems and entrepreneurship. Approximately 3,000 students are enrolled in the Marriott School’s graduate and undergraduate programs.
Writer: Arie Decker