University student plays virtual Wall Street and wins big

“The UpDown” is an online stock market simulation that allows users to trade stocks.

Devin Henry

Mr. Monopoly would be proud of University first-year Dan Rice.

The finance and entrepreneurial management student recently began playing an online stock market simulation called “The UpDown,” a game that allows users to buy and sell stocks with a virtual $1 million portfolio.

on the web

To see the UpDown, the Web site where Dan Rice made his fictitious online fortune, go to www.theupdown.com

“It’s one of the most powerful tools a person who is interested in personal investment can use,” he said.

The game pits players against the S&P 500, letting them buy and sell stocks and see their profits or shortfalls benchmarked against the index.

Rice’s 11 percent gains are the largest on the site, which launched to the public Sept. 4.

“Some fund managers struggle to make 10 percent each year,” Rice said, referring to real-life stock brokers.

“The UpDown” CEO Michael Reich, who attends the Harvard Business School, said he got the idea to create the site last year.

“I have some classmates who told me that they’re looking at jobs in the industry,” Reich said. “They basically are using “The UpDown” to build a track record and to convince recruiters that they’re able to make money investing.”

Reich, who started investing in the real stock market at age 14, said he thinks “The UpDown” program is a good tool for students looking to go into financial careers.

The site is geared toward anyone attracted to personal investing, Reich said.

“But you have to be interested,” he said. “It’s not like Facebook where anyone can go to stay in touch. It’s for people who are interested.”

More than 7,000 people have logged on to “The UpDown,” Reich said, all vying for $10 to $100 cash prizes awarded to the highest earners and to the best investment analyses written each week.

Felix Meschke, assistant professor of finance, said he uses some simulation technology in his classes, but generally encourages students to shy away from Wall Street simulations like “The UpDown.”

“If you play this for a couple of weeks, you can do all kinds of crazy stuff, and if you’re lucky and you do well, you feel like a genius,” he said. “I think in order to get meaningful feedback you need a long time period. You need proper reflection on what you’re actually doing.”

Meschke said the large number of students using “The UpDown” program will produce players who outperform the professionals. He said people shouldn’t rely too much on those results.

“You see those headlines all the time,” he said. “In the short term, stuff like this happens, but it is completely meaningless.”

Finance and marketing junior Amber Behrens was one of the first students involved with “The UpDown” when she was invited to test the site in June. She said she likes the program, but wishes it had a larger scope.

“It helps me be more aware of the market and what’s out there,” she said. “However, it’s more short term than long term and I think if I was investing in the real market, I would need to consider long-term effects.”

Behrens said the Investment and Finance Organization, a student group of which she is president, is looking to merge with Rice’s proposed group, Discovering Wall Street, to do the simulation together.

The goal would be to “collectively beat the S&P 500,” Rice said.

Despite being a first-year student, Rice’s knowledge of finance and Wall Street is apparent.

Apart from investing in the actual stock market, he also organized much of his parents’ 401(k) retirement plan.

He said his favorite stock right now is Apple, and he expects the market to close out well this year. He said he expects a “flat” market in 2008, and is “very bullish on foreign markets.”

Are other players angry at the young investor’s success?

“I don’t think that there is any jealousy involved,” Rice said. “It’s fake money.”

Somewhere, Mr. Monopoly is smiling.