Stock-Trak Simulator Analysis Report (Term Paper Sample)

STOCK-TRAK SIMULATOR ANALYSIS REPORT
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STOCK-TRAK SIMULATOR ANALYSIS REPORT
INTRODUCTION
For the past short period, I have been participating in stock-trak simulation to understand what it takes to trade in the stock market. With stock-trak, I have come to understand how real-time market space is used today. I have gained a better understanding of investing in stocks and how individual companies operate in the stock market. The amount of fake money allocated is the one I used to make trades for the stocks. The trade process involved market buying, selling and use of dividends. I had little experience with stock trading prior to interacting with the trading process at the stock-trak. The stock market is always an interesting dilemma and I grew longing to experience how it works. I have got the opportunity to invest and experience how stock owning and investing shares can be strategized. All through my overall simulation, I have invested in four different stocks; AMZN, MCFE, TVIX and WMT. I had another one, GEOVAX LABS but I sold it because it was so volatile. From all the transactions, I managed to have a portfolio value of $992, 106,597.29 with an investment return of -0.79%. Trades allowed were 6/14 and the buying power was $1, 814, 597.29. This report is an explanation of the strategies I followed in the choice of investments, total returns, risk characteristics, specific industry events that influenced the decisions and challenges of the simulations and how I learned from them. 
The Reasons for Your Choice of Investments
The main strategy when I engaged in the stock-trak simulation was to diversify my portfolio across different sectors to maximize my returns. I aimed to venture into different sectors with low-risk stocks and stocks which have some correlation with other equities in my portfolio, whether positive or negative. The main goal of the portfolio was to achieve a 10% return. Therefore, I set the following policies to achieve this 10% overall return. 
Majorly, all long positions are held for long. The only time they will be disposed of is when they stop the good performance. All short and long positions providing the best ROI are kept. 
Risk management is critical. The key contributors to risk management in stock trade are diversification and asset allocation. The reason why I diversified my assets across industries was to eliminate the uniqueness of risks across the market. Gambeta and Kwon (2020) explain clearly that investment in foreign markets can decrease market risks and eliminate unique threats in the market. 
The best strategy for positive returns in the long is to trade with the exchange trend. The exchange trend is an important knowledge background as mathematical analysis indicate that small trend components disorient changes in equity price. 
Eliminate loss: in my portfolio, any stock that is constantly underperforming must be cut off to avoid losses without expectations. The asset allocation policy that I chose to follow in the trading process at first split the first half into retail, technology and pharmacy but the other half diversified it to financial. For me, I only chose to invest in the American domestic market because I don’t too much market knowledge and familiarity with stock markets outside the United States. However, the negative overall return my portfolio gave me wasn’t so much impressive and I felt I should have invested in more profitable assets. 
Here are my financial decisions influenced by the policies I strategized on;
* MCFEE: I made the decision to buy this stock because of a WSJ article, its profits jumped in the second quarter from a year earlier as revenues rose and consumer subscribers increased, it is s recommended strong buy from analysts. However, this investment did not go very well. 
* WMT: Walmart Inc. is a market leader and a strong blue-chip stock it has had an increasing revenue over the past 5 years, it has a market cap of 417 billion dollars, and I would personally think this is going to be a great year for retailers because of post pandemics effect on the population.
* AMZN: Amazon is one of the most famous blue-chip stocks in the market right. Now, it is at a good price in the market and doing well. My investment in a retail company such as Walmart was mainly for risk management. I wanted to diversify with a non-physical retail store like it and this was a heavily influenced decision. I also observed that it is a recommended strong buy from analysts.
* GEOVAX LABS: the main reason influencing my choice was its visible stability. According to its financial statements, the company has a great current ratio of 54.75. This great current ratio indicates that it is very solvent it has the ability to take a lot of leverage to expand and grow more. Diversification was another reason for the choice of the stock. To manage risks, I also wanted to diversify my portfolio from technology and retail to other industrial sectors. Therefore, I decided to venture in the medical and pharmacy industry since it is a top gainer. However, it was a mistake I sold it because it was so volatile. 
* TVIX: as part of my strategy to trade along with the exchange trend for long term returns I chose TVIX. I wanted to diversify my portfolio by choosing the second-best performing ETF on this day. Pretty impressive, it has 8% profit as of today.
The total return on the portfolio
From the actual return of the stocks in the open positions, my portfolio had a total value of $992,106.27 and a percentage return of -0.79%. This is a loss on my investment. I can attribute this to some of my stocks that proved hugely unsuccessful compared to the successful assets. One this I regret is the failure to invest in an EFT stock company early in the simulation process. On the first day, I bought MCFEE and WMT equity stocks about 2000 and all gave negative returns. On the next day, I tried to make stock recoveries and spent my dividends only to realize a small return of investment. Amazon and GOVX showed great potentials. The worst stock was MCFEE and WMT with a really low FX value, -30.79% and -2.41% respectively. 
Having MCFEE as the worst I invested in was definitely a strategic offset. As most people already know, MCFEE is relatively new and has been very clinical in its software’s and advertisements across search engines such as Google and YouTube. It was evident its stocks are on the huge considering the presence of the covid19 pandemic which has intensified use of technology across the spectrum. Openly, no one would have forecasted such a huge reduction of the company stock price. Even though the company decided to do a stock split increasing my shares to 1500, I lost money eventually as the return was -$13,950.00. Next, I had Walmart. As a popular retailer constantly engaged in the most favourable online shopping and operating online stores, its aggressive social media strategies lured me to choose it. I believed despite being public, its stock price will continue growing little did I know it was at its peak for the period. The company IPO was a promise of a great future. After I bought the stocks, it went down constantly and gave me a loss (-2.41%) as well.
However, though in a low margin, I also had two successful stocks. Amazon performed well and gave me a profit. After doing the best research just that of Walmart, I realized that Amazon was the best investment security to invest in given its aggressive social media and digital strategies. Its net worth is really impressive and the reason why it slightly exceeded the average by over 8%. With the success I realized with TVIX, I discovered how important I should have invested in both equities and EFX securities. Diversification of securities to aid the industry could have better for me to realize better returns. Looking at the performance of EFT on NASDAQ, I believed that this stock has the potential of doing so well. I had paid only 5.60 and gave me huge returns of $550.00. 
Risk Characteristics
From the above selections, I went for a very high investment risk portfolio. 
Risk and return do have a correlation (a link between two variables in which both move in the same direction)—with one important exception. There's no assurance that taking a bigger risk will result in a bigger payoff. Taking a higher risk, on the other hand, may result in a larger loss of cash. A lot of the time, it's also true that there's a link between the number of risks and the likelihood of success. In general, a reduced risk investment has lower profit potential. A greater-risk investment has a higher potential for profit, but it also has a higher chance of losing money. When it comes to investment risk, it's common to think of it as a spectrum. Short-term government bonds with low yields are on the low-risk end of the spectrum. Investments such as rental property or high-yield debt might be found in the middle of the range. Equity investments, futures and artifact contracts, as well as options, are on the risky end of the scale (Kaya and Kwok, 2020). Investments with varying levels of risk are often grouped together in a portfolio to optimize profits while limiting the risk of volatility and loss. Applied mathematics approaches are used in modern portfolio theory (MPT) to determine an economic frontier that leads to the lowest risk for a given rate of return. Assets are created by utilizing the concepts of this philosophy.
Despite trying to establish very strong grounds with my investment policies, my stock p...