During the three week course on Corporate Valuation at Columbia University, we used Stocktrak, which is a stock market simulator. Whilst using this simulator, I realised how a pressure to perform in the short-term can cause you to make mistakes. On the Monday afternoon of the third week, the professor urged us to 'shuffle our portfolios' and look at the ranking. Being roughly tenth or twelfth out of fifteen, I was overcome by the urgency instinct, and proceeded to make decisions poor decisions; they were so bad that I immediately reversed some of them!
This experience reaffirmed my belief that stock market simulators are useless in terms of teaching people how to make money in the real world. They encourage you to be speculative and short-term oriented and make decisions based upon superficial analysis. This is all because without the fear of losing real money, there is an inclination to ignore the downside and focus on the upside. That being said, they are arguably a useful way of reminding yourself about the common errors made by asset managers.
This experience reaffirmed my belief that stock market simulators are useless in terms of teaching people how to make money in the real world. They encourage you to be speculative and short-term oriented and make decisions based upon superficial analysis. This is all because without the fear of losing real money, there is an inclination to ignore the downside and focus on the upside. That being said, they are arguably a useful way of reminding yourself about the common errors made by asset managers.