Fall 2000 Stock Market Contest Rules

FUN! The thrill of victory! The agony of defeat! No real money is involved, so you can try as crazy an idea as you like, especially since the contest is only about eight weeks long. You have to stay fully invested at all times and dividends don’t count, so what you are after is quick price appreciation. Find a hot stock and cross your fingers. Or pick something stable and hope the market plunges. Who knows what will work this time? Regardless of the performance of the market as a whole there are always individual stocks that do well -- or poorly. And that makes for excitement.

And contestants might learn something, too. Watch how the markets work. Watch the reaction of the markets and individuals stocks to changing circumstances in the financial, economic, and political worlds. Compare individual contestant performances and portfolio averages to the market indexes. It always more fun when you have a stake in events.

            Jim Janke
            East Hall 7
            Dakota State University
            Madison, SD 57042
            jim.janke@dsu.edu
            605/256-5848

1.	The contest is open to all students, faculty, and staff of Dakota State University and their families. Contestants from outside the college community can be invited to enter as well.
2.	No investment experience is needed. You can throw darts if you like.
3.	There is no entry fee. No prizes either.
4.	The number of contestants is limited. Active participants from past $tock Market Contests are given preference; all others are entered on a first come, first served basis.
5.	Initial trade orders from contestants must be in by the start of stock trading on Monday, October 2, 2000. All initial trade orders will be executed at the start of trading on that Monday using the closing prices for the stocks as of Friday, September 29, 2000. Monday, October 2, 2000 will be Day 1 of the contest. The contest runs for 40 trading days, which should make the contest end about November 27, 2000. Contestants failing to get their initial trade orders in by the start of trading on Monday, October 2, 2000 will be dropped from the contest; everybody has to start out at the same time so that all have equal exposure to market risk.
6.	For initial orders you will know at what price the trades will be executed because you will know the closing stock prices as of Friday, September 29, 2000. Throughout the remainder of the contest, trades must be submitted before you know what the exact trading price is going to be.
7.	Each contestant starts with a hypothetical $10,000 in cash. The standings at any time are determined by the relative total values of the contestants' portfolios of securities and cash.
8.	Any common stock listed on the New York Stock Exchange or the NASDAQ National Market Issues list (in the Wall Street Journal) can be used in the contest.
9.	No security with a price less than one dollar ($1) can be purchased. However, a contestant might have to sell a security for less than one dollar.
10.	A contestant can make trades (buy or sell) anytime during the contest. Orders for trades can be submitted to the CA on slips downloaded from this Web site or on any piece of paper. The slips can be delivered to the CA's office by US mail or campus mail or simply handed to him. The CA will also accept orders submitted by e-mail. Either way the CA must have the order in writing to try to avoid confusion and misunderstanding.
11.	The CA is not responsible for lost, delayed, illegible, or misinterpreted orders. The correct ticker symbol for the stock must be part of a buy order. Ticker symbols are listed in the Wall Street Journal or can be obtained online. If no symbol is listed for a stock or you can’t find one, you cannot buy that stock. Also include your e-mail address so you can be sent a confirmation. The ticker symbol is needed to ensure that the CA will buy the stock you really intended to buy. Ticker symbols are not needed for sell orders. (But you can’t sell short.)
12.	The price used for the security transaction is the closing price of the security on the day the trade order is received by the CA. The CA picks up his campus mail about noon. E-mail is considered to have been received as soon as it was sent, as indicated by the date and time on the e-mail itself. The day is considered to have ended when trading has ended for the day, 3:00 pm CST or CDT. Orders received by the CA before 3:00 pm (orders simply placed in his campus mailbox don’t count), will be executed at that day’s closing prices. An order received, say, by e-mail at 3:02 pm will be considered to have been received the following trading day and will use the following day’s closing price for the transaction. This is done to instill some uncertainty into the execution price, mimicking a market order. Limit orders are not allowed in the contest.
13.	The source used for quotes will be the Wall Street Journal, PC Quote, or some other Web quote server.
14.	Because a contestant will not know the price at which an order will be filled, an approximate total dollar amount (including commission) can be specified instead of a number of shares.
15.	There is no limit on the number of trades a contestant can make during the contest. However, bear in mind that all trades are executed “at the open” at the previous day’s close. So it doesn’t matter when during the trading day a trade order is submitted. (And don’t forget about commissions.) A trade submitted during trading during the day can be cancelled or changed if cancellation is received before the end of trading on that day.
16.	A contestant’s portfolio can contain no more than four (4) stocks nor less than two (2) stocks at any time. Buying one security while selling another security on the same day to make room for the new one is permitted.
17.	A contestant cannot place a buy order so large that a single security will make up more than 60% of the portfolio's worth at the time of the purchase. However, a security's market value may subsequently comprise more than 60% of the worth of the portfolio if such a condition occurs because of price fluctuations occurring after the purchase of the securities.
18.	All portfolios must be fully invested at all times, except for the small amount of cash remaining after whole shares are purchased. If a security is sold, another security (or more of one already in the portfolio as long as there are at least two stocks in the portfolio) must be purchased on the same day with the proceeds from the sale of the first security. The CA will change a trade order so that the portfolio is fully invested, using leftover cash from a previous order, if any.
19.	Each contestant can manage only one portfolio.
20.	Cash balances do not earn interest. Cash balances should be quite small anyway.
21.	Cash dividends are not paid. The contest emphasizes quick price appreciation, not total return, and that should be taken into consideration when making stock selections. Stock dividends will be taken into consideration if the CA is made aware of the stock dividend. Prices can be affected significantly by stock dividends.
22.	Stock splits are taken into consideration when noticed by the CA, but there is no guarantee that the CA will notice the split, especially in stocks that are extremely volatile. It is the responsibility of the contestants to make sure that any stock split is brought to the attention of the CA.
23.	Trades are considered to have been executed at the beginning of the day after the day the trade order is received but at the closing price from the previous day, the day the order was received by the CA. Trades are settled immediately. See Rule 12 for a definition of “day.”
24.	No trades can be submitted during the last day of the contest, i.e., after 3:00 pm CST on the day before the contest ends. The last possible trades will take place on the morning of the last day of trading for trades received during the previous day.
25.	The following practices are not allowed: a. day trading d. stop orders b. short selling e. limit orders c. using margin f. any other practice the CA disallows

26.	All trades are assumed to be carried out through an online discount broker. Reflecting how inexpensive such trading has become, a commission of only ten dollars ($10) will be charged for each trade, regardless of the number of shares or the value of the securities involved.
27.	Commissions are calculated on each trade separately, even if several orders are placed at the same time.
28.	Prices of stocks being used by contestants in the contest as well as values of market indexes are recorded daily and posted on the contest’s Web site. Contestants can determine the execution price of their stock orders by consulting the list. Then add on or subtract the $10 commission. Contestants will usually receive e-mail confirmation of their stock trades anyway, but consulting the stock price record will give you an idea of what other contestants are buying and how their stocks are doing. The contest’s Web site is at: http://www.courses.dsu.edu/finance/smc/fall2000/fall2000.htm
29.	Standings of contestants are calculated and posted to the Web daily unless the CA simply does not have time to do so.
30.	A security that is delisted from its exchange during the course of the contest will be considered to have become worthless, unless the contestant can document a value for the security as of the end of the contest.
31.	A security for which a price cannot be found with minimal effort by the CA at the end of the contest for whatever reason will also be considered to have become worthless, unless the contestant can document a value for the security as of the end of the contest. Stocks can disappear from listings because of mergers or acquisition. This can be difficult for the CA to determine and not worth much effort on the part of the CA.
32.	If a contestant knows that a security in the contestant’s portfolio has disappeared because of a merger, purchase, etc., the contestant must notify the CA to make sure the transaction value is used for the stock price thereafter, i.e., what stock should take its place and at what price. Or cash may have been generated by the transaction that must be reinvested immediately by the contestant. The contestants should not assume that the CA will be aware of these special events
33.	A security that does not trade for an extended period can be removed from a contestant's portfolio (at a value of zero, but no commission charged) upon the request of the contestant in order to make room for another security.
34.	Avoid inactive stocks. Inactively traded stocks are a nuisance for the CA to use in updating prices and standings. Contestants will be asked to replace such securities with others at a negotiated price. No commission will be charged.
35.	AWARDS! The three contestants having the three highest valued portfolios at the end of the contest will receive an impressive certificate indicating their finishing place. They will also be listed in the contest’s Hall of Fame, found on the contest’s Web site.
36.	The contestant finishing in last place will also receive an appropriate certificate. As long as people don’t look too closely at the certificate, it will still look impressive on a wall.
37.	To handle unforeseen circumstances, the above rules may have to be revised or new rules created by the CA during the contest.
38.	Any disputes will be settled by the CA, and the decision of the CA is final.
39.	When the CA is wrong, see rule 38.

College of Business and Information Systems
Dakota State University
Madison, SD 57042
Page Manager: Jim Janke
Contact at: jim.janke@dsu.edu
http://courses.dsu.edu/finance/smc/fall2000/rulesF00.htm
Last update: September 27, 2000