Economics and business administration professor Sam Howell gives students in his Investment Analysis course $500,000 in virtual money and lets them borrow another $500,000 to test their investment strategies. With up to a million dollars to invest over eleven weeks, teams of two or three students begin a contest to see whose portfolios increase the most. First place winners receive eight extra points on the final exam, the second team seven, and so on until the eighth place team. All others receive one point. Each group's summary report of the simulation counts as ten percent of the course grade.

For the contest Howell uses the Virtual Stock Exchange Investment Game (www.virtualstockexchange.com), which "provides an opportunity for students to buy stocks long or short, allows market or limit orders, and allows margin purchases," according to Howell. He provides students with Web sites to follow their stocks, such as www.fool.com and www.cbsmarketwatch.com. Students have the option to establish their own running tickers online and monitor their portfolios' performance throughout the trading day.

Part of the computer simulation requires students to write in logbooks or journals and reflect on their choices of stocks: Why did they buy or sell certain stocks? Who gave them the tip? Have major news stories affected their stocks?

Howell encourages the use of the library's resources such as the Wall Street Journal, Barron's, the S&P Stock Guide, and the Value Line Investment Survey. He also advises students to "keep up with the world around [them]" by watching TV's CNBC, CNNfn, The Nightly Business Report, Wall Street Week, and other news sources. He hopes that students will relate news events to their investment decision process. For instance, how does the Federal Reserve's raising or lowering of interest rates affect stocks they own or might want to buy? How do economic and world conditions affect their portfolios?

At the end of the exercise, students submit a written group report of their research which includes not only a detailed transactional history but also an analysis: Why did they buy and sell investments? How does their portfolio's performance compare to major stock indexes? Why did their portfolio perform as it did? "If the market in general was going up and their portfolio was going down, they have to try to figure out why," says Howell.The report ends with an analysis of what they learned from the project. "Hindsight is always 20/20," Howell tells the class. "If you had it to do over again, what might you do differently?"

One semester the simulation site changed owners, forcing students "to contend with a three-week, no-trade period." The main problem Howell encounters in using this computer simulation, however, is the short period of time. In a course designed to teach students to be long-term investors, an eleven-week simulation tends to emphasize the opposite: day-trading for the short term.

"Riding Roller Coasters," the title for an article on the simulation that Howell wrote for his department's newsletter to alumni, describes the teams' experiences during the last few years. During the spring 2000 game, the top team's portfolio grew 66.7%. But by the next spring, Howell says, "The dismal market was reflected in the students' performance. During this game, success was measured not by who made the most, but by who lost the least!" The winning team's portfolio dropped 10.4%.

Howell's aim is to make his students lifelong learners and to point them in the right direction by using technology as a valuable educational tool. The participants' observations that Howell shared in the last paragraph of his article show his success:

One group wrote, "We have learned that the market is a risky place to put your money." Another shared the following,". . . our group learned the more risk you take, the better chance for a greater return. We also learned the importance of having a well-diversified portfolio. . . " Finally, a team wrote, "Overall, the game was a tremendous learning experience for our group considering the slow market. We were very thankful that we played the game with 'pretend' money, rather than our own."

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