Great interactive from WSJ that allows students to try their hand at picking a stock based on certain factors (company description, P/E ratio, earnings growth, revenue growth, price to book ratio and cash flow). The interactive progresses through six rounds with students selecting one of four stocks in each round and then watching as a decade of stock price performance play out (in about 10 seconds). They then see how their stocks performed vs. the ones they didn’t select as well as an index fund (S&P500).

Here is a sample chart after the sixth round:

Screen Shot 2016-07-06 at 3.46.16 PM

The game also progresses to an advanced round where students are provided information on multiple factors and have to make decisions based on more information.

Some questions for your students:

  • Which stock did you select in each round?
  • How did your picks do vs. the S&P500 index?
  • How many of the stocks you picked outperform the market? Underperform the market?
  • Was it easy to predict what stocks would do well based on the factors?
  • What do you notice about the stock price charts of individual stocks vs. the chart for an index fund?
  • How did you feel as you watched the stock price chart for your picks play out over 10 years? Do you think it would be easy/difficult to have the courage to hold a stock for 10 years?
  • How did playing this game change your view about picking stocks?

Hopefully this interactive will humble even the most confident stock pickers as they see how difficult it is to project the future prospects for companies and how index funds how a diversified portfolio produces more predictable returns over the long term. They will also see the volatility that comes from individual stocks and feel the pain of losses and exhilaration of high returns (hint: losses feel worse).After all, who would have expected General Motors would go bankrupt during the Great Recession? Enjoy!