ASSIGNMENT ON STOCK ANALYSIS

Introduction

Acting as a small hedge fund manager for a project simulation, I derive certain decision for the development of allocating strategies to take initiatives. The main purpose of portfolio management was maximization of rate of return on the investment.  The level of risk as well as time period for investment gets aware with such investment decisions. In this regard, evaluations of options are to attain best outcome of investment portfolios.   This consists on the stocks, bonds, mutual funds and future contracts.  The project involve on the investment objectives and development of effective strategy to attain such objectives.  I have researched my options before investment in the executing and securities trades.  Continuity in tracking of performance as well as balancing the portfolio recognizes me to follow up with my strategy and insure results outcomes. For effective evaluation of investment portfolio, I recognize S and P 500 for benchmark.

Investment objective and strategy

My original objective of investment is the best performance in total rate of return. My investment consolidates towards moderate to high-risk investment to attain my investment objectives accordingly. I take certain research to develop informed decision making for the project. As I have already stated that S and P 500 stock index was my benchmark for the investment portfolio. My objectives was beat stock index and consistent with my stated objectives.  The horizon for investment portfolio is about 10 weeks. I have to consider about trading minimum 32 times.  Total 32 trades are traded by me. I was given $ 1,000,000 allocated towards best allocation strategy. According to percentage, profile of my investment strategy is recognized as 12% in bonds, 85% in domestic and foreign stocks, and remaining 2.31% in money markets portfolios.


Asset Allocation
Stock114127.09
Bond17046.73
Money Market3100

The chart reflected the major considerations towards the asset allocation. My strategy is consistent with the variety of investment and research in investment stock indexes with moderate to high-risk industries. The diversification in my investment portfolio leads with my set allocation strategies. I believe that portfolio strategic implications reach to achievement of my goals for portfolios.

Throughout the course of semester, I am meticulously consistent with the original allocation of asset towards economic conditions. By the end of semester, I was close to in setting allocation. The main reason for closing such is unavailability of substantial amount to actually invest in category to meet my desired expected allocated numbers.

I decided that I would consistent in my current investment portfolios and I would try to attain that value of asset allocation that I had lost. In addition to this, I would also like to initiate some new investment in that portfolio investment to effectively exploit opportunities. I believe that this consistency in portfolio drives more accurate view to meet my goals. Inclusive of all investments, I found to investment in the bonds and stocks, because such investment portfolios are more straightforward as compare to others.

Current economic situation

Towards current economic situation, I would allocate 85% to equities, 12.70% to bonds, 2.31% to Options. In 85% of allocation in equities, I would allocate domestic capital equities, which are large with 72%.  In addition to this 12% investment in the international development equities, 12% in the domestic’s small capital equities and 4% in the equities of emerging markets.  The normal allocation proportion is considered to get the benefits from Options and currencies investment. The main reason of investment in such portfolios is less amount of risk is considered in this category.

I believe that stocks of emerging markets no exhibit with more correlation comparison with the stock market developed in this year.  The reputation and foundation of developed stock markets are not associated with the risk of emerging stock markets. My views on euro and dollar currency are different. In my opinion dollar is stronger in the current economy as compare to euro currency.

More buying power of dollar recognized towards euro. This initiated many benefits who invest in the dollar currency.  On the other hand who invest in euro reveals disadvantages. Inflation poses risk to investors. Increase inflation certainly reduces power of buying.  Increase in inflation resists investor to invest in the currency portfolios. Interest rate also creates benefits for the investors in the future events. Interest rate can be used as hedging risk in portfolio investments.

Actual allocation results

my actual asset allocation towards investment portfolios is 21.78% in cash, 12.19% in options, 23.3% in bonds, 32.2% in stocks and 10.6% in future investments. Thus, total portfolio of investment was $ 1,092,988.18.  The total rate of return is associated with the 1.86%.  My highest value was $ 1,099,388.83 and lowest value was $ 988,692.53.  I preferably used yahoo finance as well as wall street journal.  Reputable online websites also considered for the research of investment portfolios. I also paid attention on the news headlines that has significant impact on the economy.


Actual Asset Allocation
                       Stock114129.09
Bond17046.73
Options3100

Investment Style

The investment style of the simulation project includes both the fundamental and technical aspects.The mixed style of investment was taken for the project because it would provide more accurate and authentic viewpoints of various securities in terms of their performances in the stock market as well as the other factors, which could harm the economy.

There were fluctuations in the investment valuesjust because of the difference in the interest rates, which were raised by the United States in the recent years. In addition, the trading times is also considered where various companies report public earnings.In the end of the project the stocks values saw sharp drop in their prices in US as well as there was drop in oil prices during this period.

Return Analysis

The incentive fee chosen for the project would be 2% where the management fee would be 2%. The selection of this type of fees was due to the reason for charging the reasonable prices, which I came to know from my experiences. The weekly returns were taken because of10-week times in perspectives of market and investment portfolio I had.

The portfolio performances were compared with the S & P 500 index standards, which are comparable. From the stock prices, there was a gain and loss as well due to change in the conditions of the economy. The trading day selected was the day of December3, 2015, which includes ten weeks as there, was trading for one week only. The accuracy in estimations for the project would come from experiences of the trading.

The worst and best performing stocks and their prices are shown in the table above. The worst and best are rated according to their return rates in terms of investment.

Top Performing Stocks
CompanyFacebookBerkshireWalmart
TickerFBBRKAWMT
QTY2001500
Profit/Loss4294517.77390

There are various reasons for markets, firms or industries, which could have potential influence on the performances of the stocks and on their prices. The best performing stocks are the stocks of Facebook as they have seen expansion in collection of returns that they offered to its customers. The Berkshire Hathaway is also performing well in terms of its stocks because they are providing a number of investment products.Some other firms are also performing well in the market like Under Armor, Chipotle, and others in the stock market.

Worst Performing Stocks
CompanyChipotleBerkshireT-Note
TickerCMGBRKAB-T-1.25
QTY6011
Profit/Loss-5589-425-4.05

The BERKSHIRE Network is not performing well as there are numerous competitors in the investment service companies.The value industry is also becoming a loss figure as many of the players are converting into other means of investment. There are some other firms, which are low performing which includes the Wal-Mart and T-Note.Due to large number of players in this specific segment of the market.I also took some investment risks in investing some low performing companies in the stock market due to the unfamiliarity with these sorts of stock and companies.In general, perspectives, the stocks are not performing up to the mark due to slower economies of the scale and industrial backwardness. The reason for this cause is the nervousness of the investors in the stock market and loss of trust on some of the stocks and its prices.

Trading Experiences

The simulation project allows me to understand the variations in the stock market and it proved to be a healthy experience in developing the relevant skills in perspectives of a hedge manager of a firm in future time. The information is related with the trading and investing skill enhancements.The trading experience of me in terms of the stock market provided me the results of 2.86% return on the investment.Although, the return on the investment was not enough but it was my first trading experience and I would expect to learn more knowledge in the future times for making most of my investment but in general, it was a good experience.The results or an outcome of this investment portfolio by me allows me to understand the economy.


AAA-M
Portfolio Ranking2
Market Value320061
Portfolio Value1028370
% Returns2.84%
Trades made36
Sharpe Ranking1
Sharpe Ratio0.94
Alpha/Beta Ranking1
Alpha-3.67
Beta0.62

The investment portfolio helps me in understanding the industry trends, whichis a supportive n future investment portfolio.I also performed various trades that helped me in getting the real insight about the profit and loss reasons in the stock market, which is very unpredictable. I had to keep me up to date with the information of the economy and market and its effects on the individual investment portfolios.For the proper execution of the investment strategies, an investor needs to be more focused on the steps to execute the investment strategies effectively and efficient.

For future investment portfolios, I would be focusing more on the thorough researching skills.There is also a need to examine criticallythe trends of the market for better investment decisions in the various stocks.

My future investment strategies would be focusing more on the research skills, which would also include the appropriate skill and information enhancements. In future, I would still be using the mix strategy, which is a combo of fundamental, and technical investment styles as it collectively foresee the two major aspects in very investments.

The current simulation project was considered as more challenging but it had allowed me to enhance my analytical and business related skills. It was termed to be very effective and efficient experiences in terms of providing me a better understanding ability for future investment portfolios.

Portfolio Simulation Project

The objective or aim of the project was to maximize the investment portfolio return.There would be investments in average and higher portfolios.I would be performing the general researches for making the better and effective decisions in the future investments.

Cash Related Items
Cash Balance348308.73
Short Sale Proceeds0
Loan Balance0
Interest Earned on cash4804.53
Interest Charged on Loan0
Total Market Value0
Restricted Funds237560
Margin Requirement0
Total Margin for Futures0

There would be usage of the S & P 500 indexes and the allocated investments would be made in $ 5, 00,000. There would be inclusion of Bonds and Fixed Income securities, International and local stocks, and money market in the ratios of 13%, 82% and 2% for the total investments.

Market Value
Market value for long positions320077
Accrued interest earned on bonds16.26
Market value of short positions0
net market value of all positions320077

The total period of my investment would be around ten weeks. The average risks would also be considered in the simulation project and its adoption of fruitful strategies in the future time.

Explanation of the Trading Decisions

I have adopted the general business and investment decisions in this perspective. Which I have opted due to extensive research made in the projects.The research was made through the help getting from The Wall Street Journal’s and Yahoo finance prior to trading in the stock exchange.

Portfolio Value1,028,386
Percentage Return2.84%
Buying Power1149711.12
Trades Made/Allowed36
SPY ETF % Return8.82%
SPY ETF at start date191.77
Current SPY ETF208.69

I have also done proper prior research in terms of various factors in the stock exchange, which could affect the investment portfolios.I also have gone through the various companies and stocks, which are maintaining a good market position in the recent times. I have made investment in the Apple stocks, which are gaining a good market position in the recent times due to its global market expansions.

Appendix

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