Guidebook

Developing a Strategy

It’s All About the Strategy

Asset managers suggest that developing a strategy and sticking with it, rather than trying a bunch of different techniques, is the best approach to portfolio growth. Even if your team is gaining in portfolio value on the Wharton Investment Simulator (WInS), without a well-defined and articulated strategy, you won’t have a shot at winning this competition.

*Note: if you provide us with a team strategy that is buried somewhere in your experience, rather than clearly stated, defined and articulated up front, you will not be among the strongest teams. Defining your strategy early is essential to doing well. Can you tweak it? Absolutely! But you need to be thinking strategically from the moment you form your team.

How to Build Your Strategy

As your team begins to discuss its path forward, think of your investment strategy as your guiding principles. Your investment strategy is a set of rules and behaviors that will guide the portfolio selections you are making on behalf of your client. If you don’t know who your client is, then you better find out quickly. He is introduced in the Case Study.

The first step in building an effective investment strategy is to understand your client and to make educated assumptions if you don’t have all the details. You can’t build a strategy without paying attention to your client’s objectives and goals. If you don’t know them all, then make some educated guesses and build your strategy from there. What tactics will you use to maximize your portfolio potential? “Buy low and sell high” is not an investment strategy. Most teams want to find companies at a low price and sell them for a higher price than they bought them in order to make a profit.

Your strategy should be unique to your team. Does your portfolio have a focus? Do you have a specific allocation to certain sectors over the course of the competition? Do you have any other specific ideas that you have outlined at the beginning of the competition that you are following through until the end? What about your risk tolerance (or that of your client)? Evaluators want to understand why you are doing what you are doing and we want to see how you have developed a plan for your portfolio using some of the new concepts and skills you are learning throughout the competition.

• You are primarily trying to build a long-term strategy for your client, so don’t get caught up in the day-to-day trading.
• One of your key investment competition tasks is to build and manage a portfolio of stocks that reflects your investment strategy and your client’s goals. An investment portfolio is a collection of financial assets – including, for example, stocks, bonds and mutual funds – that  is strategically constructed to accomplish a specific financial goal. This competition only allows investment in stocks from an approved stock list, though you may want to consider other assets in your overall strategy (not a requirement).
• Let us stress that again: you are not trying to prove the worthiness of your long-term investment strategy through how your portfolio performs over 10 weeks of trading. This game is not about making money fast. It’s about developing a sound strategy that will build wealth over time.
• We see teams buying lots of stocks and selling just as many. If you are investing over the long-term, don’t be too quick to sell a stock once it begins to drop in price. Stock prices move up and down quite significantly over a short time period. You may want to ask yourself, “What will this stock be worth farther down the line?”
• Your client would like to make some short-term investments to generate profits for a specific need. You may want to do more active trading for this portion of your portfolio.
• Take a moment to read the articles about past winning teams, which will inform you about aspects of their strategies. This article details the 2020 global finale and winning teams. Read about the Region 1, Region 2, Region 3 and Region 4 finals, as well. If you want to continue your research into strategies, by all means dig into our newsroom archives, where you will find finale reports from the past several years.
• Be creative as you develop your unique team strategy!