My experience with the Wharton Global High School Investment Competition
By: Abhinav Penagalapati
Tags: Trading, Stocks, Investment, Wharton, Investing

When the Coronavirus pandemic started, my middle school closed and transferred to distant learning. I got immensely bored and started looking for ways to make money. I scoured many websites and didn’t find anything concrete for me to start. At the time the news was all about how the economy was going into a recession, and how the markets fell 30%. I got my parents to set up a custodial account for me, and with $3,000 of my hard-earned money, I started trading. This money came through prize money won from chess tournaments. I was still very naive to the stock market at the time, and I used to read the news and look through the internet for stock recommendations.

Fast forward nine months, and I have completed the Wharton Global Investment Competition. I now have great knowledge of how the markets work and different investment strategies. When 9th grade started in August (obviously distant learning), I was looking for finance programs to take parallel to school. Here I found out about the Wharton Global High School Investment Competition.

The competition is open to high schoolers all over the world. You must have a team of 4 people or more to compete. This competition is for 10 weeks. The team is challenged to create a long-term portfolio for a client, based on his/her background, risk level, and other specifics provided. Every team in the competition has the same client. The team will have a simulation account with $100,000 (keep in mind the money, and the client is fake). The goal of the competition is not to be the team that makes the most ROI on that $100,000, but to develop a long-term strategy for the client. There are 2 deliverables in the competition which decide the winners, a mid-term report and a final report. The next step in my journey was to find a team and an advisor capable of assisting me in the competition.

The day I found out about the competition was about 3 days from the registration deadline. I didn’t know anyone in high school yet, and I didn’t know who to ask. My family and I moved right before Covid-19, and I didn’t have a chance to make any friends. In most high schools, there are student-led clubs, and I was part of a club called Business Professionals of America in school. I found teammates in this club, and I now had a total of 5 members in the team. The only thing left was to get ourselves an advisor and have them register our team. Thanks to my teammates we found an advisor and he registered us for the competition in time.

The competition started on September 30th, and off to the races were 5000+ teams. Each team member is assigned a sector, and from that sector, there should be at least 1 long-term stock. I was assigned the Consumer Discretionary sector, which consisted of companies like Target, Lululemon, and Marriott. Our client stated that he needed the team to also accomplish a short term goal, of generating a return on $10,000. We decided to accomplish this target first, and then move on to finalizing the long-term portfolio. In the first 2 weeks, we had accomplished a return of 5% and were actually in 4th place in the ROI standings. I used the market volatility to our advantage and bought on very red days, so that the companies would have a higher probability of going up. However, our team knew that was not supposed to be our main goal. Our team developed a bond and started working together very well, to decide which companies would be best for our client.

Our team decided to use the Modern Portfolio Theory (MPT) as the strategy for our client. This strategy ensures that the return of the portfolio is maximized by diversifying the portfolio. By investing in multiple companies, the portfolio is less subject to volatility and risk. We determined that a mix of growth and value stocks would be the best combination to ensure market-beating portfolio growth. Our first competition deliverable was the Mid-term report, due by November 2nd. Here was the first difficult situation with my team. My team was not as committed to the report as I was, and they didn’t contribute much. Some of the team members did not attend the meeting where we were workshopping the report.

I was actively trading to give our team some flexibility with extra capital. I managed to get our account to a value of $110,000 by actively trading. We had decided on the strategy, and we had to pick the companies that we would purchase for our client. We had set a deadline of November 23rd for the team to come back with the long-term stocks. The team had to have some sort of reasoning for picking that company, as the final report was due in 3 weeks. My pick from my sector was Stitch Fix (SFIX). Over the next 2 weeks, I purchased the companies that my team had selected. Some of the companies were Visa, Procter & Gamble, and Microsoft. We had some difficulties with agreeing on how much % of the account should be invested in each company.

The last trading day was December 4th and the final report was due on the 11th. My team had a couple of intensive sessions in order to get the report done. This time, my team contributed a little bit more, but it was still me doing the heavy lifting. Here are the final holdings of our team, and our overall ROI over 10 weeks. Keep in mind that the stock prices are not up to date, they are as of the market’s close on December 4th, 2020.