Investment Portfolio (Coursework Sample)

Investment portfolio
Name
Professor
Course
Institution
Date
Team’s Goal
The major aim of our team is to gain understanding of the market movements and to venture in investing, especially trading activities, that would result to optimum returns with minimal risk.
Investment scheme/strategy
Active/Passive
The nature of the investment is highly active because it involves studying trends in the market and trading on market stocks to maximize the returns. The investment strategy used involves constantly monitoring the markets and stocks of various companies. In order to understand price movement, the stocks are analysed at the time when the market is down. Consequently, the strategy is considered to be highly active.
Bond/stock
The platform used for practicing portfolio only allows trading on stocks thereby leaving out bonds. The stocks option provides other categories of activities such as growth and value investing. Further, the platform also provides the option for long-term security stock which can be purchased for the sake of gaining knowledge about movements in the market.
High/low risk
The major concern of the team, as aforementioned in the objective, is to adopt a strategy that ensures optimized return at lower risk. The team looks forward to understanding the trends in the market and movement of stock while keeping alive the need to minimize the risk. Consequently, the team’s scheme is that of low risk.
Special sectors
The preferred sector is services sector because it currently dominates the major economies of the world. However, the need to embrace diversification of portfolio has triggered the addition of other major sectors dealing in, technology followed by consumer goods, financial, industrial goods and others. Diversification have been adopted by balancing investment across the above sectors to ensure that there is lowered risk with optimized returns
Special economic/political condition
In this investment practice, both economic and political conditions have been considered as deciding factors on the number of stock to be purchased from any given company. This is because these factors have significant effect on the movement of stock prices and therefore can affecting trading of the subject stock in the market. In which case, investors are required to study the stocks on whether they are favored by the current prevailing economic or political conditions before making a buy or sell. The Wall Street survivor presents platform that has section for Recent News concerning the recently purchased stock contained in a portfolio.
Fundamental, technical and comparative analysis in investment and portfolio decisions
In making the decision about the investment and trading, both fundamental and technical analysis are used.
Technical analysis: The techniques involves obtaining data regarding price movement of a given stock and then using the data to predict future trend of the price. This normally involves accessing the statistical records of the individual stock based on their past performance to help in estimating the future values.
Fundamental analysis: This technique of analysis makes use of economic factors in assessing the stocks. The economic factors considered for this scenario include government policies, market trend and financial status of the company.
In deciding which analysis to use, it is important to consider the criticism against both. At times, the two analysis can be used together especially when they move in accordance to each other. For this particular case, the team considered the use of both fundamental and technical analysis in assessing the stock; even though in some cases the two do not coincide. In particular, technical analysis has mostly been usedin cases where the use of fundamental analysis was limited because of its theoretical and time-consumingnature.
In which case, the analysis used involves first accessing the intended market price for the decision to sell a stock through comparing it against previous day close price, its highest close price till date and stock company’s current position. From this comparison, if the result is found to be optimal then the decision is to sell the stock. If the current position of the stock is positive over its bought position, and it is expected to perform well in the future, the decision to sell out the stock and then purchase new stock from the same company is made. This acts as an appropriate strategy of maintaining the returns while minimizing the risks. In a third case whereby there is anticipation that the stock will not perform well in the future then the stock is sold out. Short selling of stock is adopted in a case where a new stock is being purchased and it is expected that it will fall in the future.
The evaluation of stock’s fundamental was done as follows:
Stock’s volatility:The team observed the change in stock price over the past period. This helped in measuring volatility of the stock by estimating the future change. The volatility (beta) was then compared with S&P 500. A beta of less than one is an insinuation that the stock will be less affected while a beta of one indicates that the stock varies with the market.
Price-to-earnings ratio: The price-to-earning (P/E) ratio was calculated for every company and compared with that of other companies, found within the same industry. The P/E ratio was also compared to that of index S&P 500. In which case, lowest P/E ratio is recommended for buy.
Stock’s book value: This refers to the theoretical amount that would be paid to the shareowners in the event of the company going bankrupt. Selling a stock below or close to book value insinuate that the stock is cheap and undervalued. Undervaluing a stock can come as the result of the company going through problems that affect the stock’s price.
Return on equity: This inventory measurement technique indicates whether the company in question has made profit from its investment. The higher the ROE the better the performance of the company against its competitors.
Debt-to –equity ratio: The nature of this technique is such that it can only be used among companies found within the same industry because it differs between industries. It is indicative of the fraction of debt and equity of shareholders used in financing the company’s assets.
Portfolio success, including market-excess and risk adjustment returns
The overall return for the 3 portfolios is negative by the end of 20th Aug’ 2015. This trend can be contributed to the fall exhibited by the stock of major companies considered top holdings where the stock was invested likeApple Inc., Rick’s Cabaret Int, Ford Motor company, Universal Health Realty Income Trustand Amazon Inc. as shown in the appendix. The following is the section depicting result from the three portfolios:
Member 1:




Member 3: Salem




Member 2: Rashed




Conclusion: Even though two of the three portfolios’ return are negative, the existing buying power limit available for each portfolio indicates that the stocks are bought and sold at the right time.
Appendix 1
The following is the table depicting the risk aversion levels:
Risk aversion levels  NameRisk aversion levelsmember 1conservative investor member 2moderate investor member 3conservative investor 
Team’s Trading History
Member 1
DateTransactionSymbolQuantityPrice PaidCommissionTotal Amount08/25/2015, 01:15 PMMarket - Sell HYPERLINK "/quote/VOD/"VOD ›50Delayed$10.00 $1,703.50 08/25/2015, 01:11 PMMarket - Buy HYPERLINK "/quote/HLT/"HLT ›50Delayed$10.00 $1,213.00 08/25/2015, 01:11 PMMarket - Sell HYPERLINK "/quote/HLT/"HLT ›50Delayed$10.00 $1,212.50 08/25/2015, 01:10 PMMarket - Sell HYPERLINK "/quote/TWTR/"TWTR ›100Delayed$10.00 $2,523.00 08/25/2015, 01:08 PMMarket - Sell HYPERLINK "/quote/FB/"FB ›100Delayed$10.00 $8,662.00 08/24/2015, 09:45 AMMarket - Buy HYPERLINK "/quote/HLT/"HLT ›50$23.77 $10.00 $1,188.50 08/24/2015, 09:38 AMMarket - Buy HYPERLINK "/quote/FB/"FB ›100$76.79 $10.00 $7,679.00 08/24/2015, 09:38 AMMarket - Buy HYPERLINK "/quote/TWTR/"TWTR ›100$23.17 $10.00 $2,317.00 08/20/2015, 12:38 PMMarket - Buy HYPERLINK "/quote/IDSA/"IDSA ›500$3.75 $10.00 $1,875.00 08/19/2015, 10:27 AMMarket - Buy HYPERLINK "/quote/ITRN/"ITRN ›40$25.77 $10.00 $1,030.80 08/19/2015, 10:04 AMMarket - Buy HYPERLINK "/quote/CCF/"CCF ›40$40.40 $10.00 $1,616.00 08/19/2015, 09:53 AMMarket - Buy HYPERLINK "/quote/RICK/"RICK ›200$10.96 $10.00 $2,192.00 08/19/2015, 09:35 AMMarket - Sell HYPERLINK "/quote/VOD/"VOD ›50$37.30 $10.00 $1,865.00 08/19/2015, 09:34 AMMarket - Sell HYPERLINK "/quote/IDSA/"IDSA ›80$3.52 $10.00 $281.60 08/19/2015, 09:34 AMMarket - Sell HYPERLINK "/quote/MSFT/"MSFT ›30$46.85 $10.00 $1,405.50 08/19/2015, 09:34 AMMarket - Sell HYPERLINK "/quote/BOFI/"BOFI ›10$130.51 $10.00 $1,305.10 08/19/2015, 09:34 AMMarket - Sell HYPERLINK "/quote/A/"A ›80$38.67 $10.00 $3,093.60 08/19/2015, 09:32 AMMarket - Sell HYPERLINK "/quote/AMZN/"AMZN ›5$533.30 $10.00 $2,666.50 08/03/2015, 03:57 PMMarket - Buy HYPERLINK "/quote/GM/"GM ›50$31.61 $10.00 $1,580.50 08/03/2015, 03:52 PMMarket - Buy HYPERLINK "/quote/IDSA/"IDSA ›100$3.96 $10.00 $396.00 08/03/2015, 03:51 PMMarket - Buy HYPERLINK "/quote/BOFI/"BOFI ›20$124.23 $10.00 $2,484.60 08/03/2015, 03:50 PMMarket - Sell HYPERLINK "/quote/C/"C ›30$58.31 $10.00 $1,749.30 ...