Stock market game allows you to trade with inside information

NOS op3
Erasmus School of Economics

Patrick Verwijmeren, Professor of Corporate Finance at Erasmus School of Economics, is one of the experts who helped develop an interactive stock market game. This game, developed by NOS op3, allows you to trade on the 2020 stock exchange with inside information. This way, you can find out how it is possible that the stock market is doing so well during times of economic hardship.

Contradictory developments

We are in a serious economic crisis, but this is barely noticeable when you look at the stock market. In fact, one record after another is being broken. In February, the AEX even reached its highest point in twenty years. The trends on the stock exchange seem to contradict the developments in the economy. How is it possible that the stock market is doing so well during such difficult economic times?

To explain what happened on the stock market during the corona crisis, NOS op3 developed the stock market game with the help of experts, including Patrick Verwijmeren. In this game the stock exchange index MSCI All Countries World index (ACWI) is used. This index contains almost 3,000 shares divided into eleven sectors, spread all over the world, including emerging markets.

Stock market experts

For simplicity, only seven of the eleven sectors of the MSCI ACWI are highlighted. These are the sectors that are easiest to link to the corona developments. Subsequently, a choice was made in shares from the top 10 largest companies per sector. It is important that a company is recognisable and that the price does not deviate too much from the average price of the sector. All shares are indexed on 1 January 2020, so that comparisons can be easily made.

However, it is not always clear why a stock is falling or rising. Therefore, several stock market experts were asked to explain the major developments that had a clear influence on the price of various sectors during the corona crisis. These explanations are shown in the quarterly updates of the game. There are many other reasons why the price of a company rises or falls, but in the game the focus is mainly on the corona crisis.

Professor
More information

The full article from NOS op3 can be found here (in Dutch).