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The paper attempts to describe the activities involved in buying and holding stocks and
sequential strategies to successfully achieve substantial market gains or movements in price of
commodities in various markets across the globe.
The process by which stocks were taken into consideration as viable investment prospects
involved the process of initial basic screening involving the delineation of important variables
that would delimit investment prospects to a select number for a further in depth review. The
application of appropriate technical analysis, deal evaluation and assessment of perceived risk
with anticipated return was carried out in the various Markets such as the NASDAQ, S&P500,
LSE, Toronto stock exchange and many others.
My overall goal of the project is to achieve a greater understanding of the stock market through
the Stock simulation. This report demonstrates a number of fundamental and technical analysis
methods of investments turning theories into practice. During the simulation, stock trades were
made based on different strategies and the overall effectiveness of each strategy was also
highlighted.
Buy and Hold Strategy
With this strategy many investors buy stock in an established company with strong structures and
finances and hold it for the long period of time usually at least a year. Lower commission and tax
levels are paid by investors who take a buy and hold strategy compared too many other
investment strategies. The stock is on hold in the portfolio just for the period the stock will rise
instead of exerting high efforts of research and analysis into the market to see how the stock is
performing. The Fundamental reason why investors partake in a buy and hold strategy is to buy
stock based on the expectation of investors and market analysiss that the economy will grow up
over the time the stocks will be held for. The price of the selected stock will increase as the
company becomes stronger. They usually ignore the day-to-day fluctuation of the stock price,
since this is normally due to the smoothing out of prices over the life of the portfolio of the
fluctuations and movements of the day on day stock prices, investors ignore the daily movements
and the market as a whole.
The first plan was to develop my buy and hold portfolio and to experiment with my first stock of
20 with 1,000,000 in total to invest. The first strategy differed from strategies such as the
momentum effect which involves studying the best performers over the last 12 months or the
contrarian approach which seeks opportunities to buy or sell specific investments when the
majority of investors appear to be doing the opposite to the point where the investment has
become mispriced. However these strategies will be explored in further transactions and detail at
a later stage with the report. Instead for my first stock I decided to take a defensive due diligence
approach inspired by the Benjamin Grahams book the Intelligent Investor I researched various
companies annual or quarterly returns.
I read at least 5 years worth of returns to form a better idea of the shape of the companys
finances and strategies for future growth, operations and any potential circumstances that may
cause a negative fall in stocks. If a proxy statement is available to find out if there is any conflict
of interests was also analysed. For example the business world saw the Oracle CEO Larry
Ellison resign however he was not replaced for a considerable period of time once he resigned,
this lack of ownership in the organisation can hinder growth in many ways.
I decided to experiment with the idea of studying the decision of those with experience doing it
at the highest level. Instead of buying stock from a beginners stand point. There may be use in
selecting stock based on previous professional investment decisions. This information may lie in
the records of numerous investment companies, or Funds which have been in operation for
many years. A lot of these funds especially the larger high trading funds are large enough to
command the services of the best Financial and security analysiss out there.
There seems to be a large volume of studies carried out on funds, some mutual funds in
particular that suggest that funds usually underperform compared to some of the largest stocks on
the NYSE. However Benjamin Graham found in his studies that funds did perform better than
previously suggested. Graham (1973) later stated that to trust these studies- that mutual funds,
on average, underperform the market by a margin roughly equal to their operating expenses and
trading costs - has been reconfirmed so many times that anyone who doubts them should found a
financial chapter of The Flat Earth Society.
Buy & Hold Stock Selection
The following stocks are many of the various selections for the buy and hold account. The Stocks
were chosen from a number of Indices for the purpose of diversity and spread of risk. This
section of the report highlights the rationale for choosing the many stocks for long term
investment in the buy and hold account. As an investor who takes a long position to own a
company with the buy and hold it was taken that due to a certain set of circumstances a company
is expected to grow and be profitable in the future.
Stock prices are often described as being connected by means of growth, company profitability
and the perceived stability of an organisation. Investors analysis dividend as a determinant for
buying a stock at a certain price, however there are a large number of companies on the stock
exchanges with high growth opportunities that do not pay any such dividend in cash so this as a
standalone entity cannot be the reason for choosing a stock. This is seen in many of my stocks
listed below therefore the dividend could not be taken into consideration for the analysis.
Researching markets and analysis is an important aspect to any Financial analyst or investor
therefore I actively researched information via www.morningstar.com & www.yahoo/fianace.
It was decided to adopt a strategy by having a diverse portfolio which has been proven to be an
efficient strategy. To reduce industry related risk I choose stock in a wide variety of industries
and also choose from different countries to avoid particular economical risk of one given
country. An example of the diversity within the portfolio;
Kerry Group
Canadian Natural Resources
Sinopec Corp 0386
Avanir Pharmaceuticals Inc
The Clorox
Figure 1: Overview of the portfolio including the above diverse trades, we can see a fall to -1.34
within the space of a few days however the portfolio performed better from the 23rd September
2014 onwards.
Co, 3.66) growth rate, because a solid company with 0% or little growth rate can be an attractive
investment if the price is right.
Stock confirmation: 200 units@ price 94.67 = $18,933.00
17th September 2014 Mu portfolio did not initially perform well for the first week as at 17th
September 2014 at close portfolio with this stock market value $999,941.64 (-0.01%).
Figure 2: CTR chart for the Hersey Company (HSY Annual Report 2013).
The above graph shows the 5 year CTR chart for the Hersey Company. It can be seen between
the period of 2008 to 2013 that the company represented by the dark blue trend line initially
struggled below the S&P 500 Index and the S&P 500 Packaged Foods Index just above $100. It
can be seen from the graph that in 2010 that the Hersey Company saw a rise in common stock
price appreciation plus any dividends. The trend line intersected both Index trend lines and
could be construed as an opportunity to purchase this stock in 2010 for a buy and hold 2013.
On further Technical analysis of this stock we see a slump in price in October 16th at $91.09
however steadily grow with this Index as seen below to $95.29 on November 20th. Following
positive announcements in December that the companies Reeses brand will be the official
sponsor of the new College Football Playoff (CFP) in the US. Also with the increased
manufacturing capacity in North America by acquiring a large player in the Canadian
confectionery brands to the Hershey portfolio the price suddenly seen a bullish trend upwards to
a high of 100.47 in late November and early December.
SMA & EMA: We see a number of situations where the stock fell below the moving averages
(as shown below) indicating to investors buy or sell the stock. However since mid October the
stock stayed well above both moving averages which suggests that the bulls are in control of the
price action around that time and that the asset will likely move higher as it crossed both 50 day
moving averages, which it did in mid October.
Gilead is in the biotechnology industry and is heavily involved in hepatitis research. The biotech
industry has seen real acceleration over the last 5 years at a rapid pace with the ever increasing
new technology and competition. The reason I choose the stock was for exactly that reason. I
bought the stock in early September at $105.77 with the expectation of further upward
movements bouncing of the support line. However the stock seemed to be part of an old bull
market with misleading acceleration as on review of the Biotech index over the last few years it
has tripled overall suggesting instability. Compared to the Standard & Poors 500 and its 69%
gain over that same span there is vast difference.
P/E: 28.30
F P/E: 28.30
Beta: 0.46
EPS:4.47
Dividend:1.42
Yield:1,1227
Shares: 438,285,696
Exchange: NGS
Costco Wholesale Corporation is massive retail chain in the lower margin fast moving consumer
goods market. I selected this stock based on its position on the top 250 list of retailers. Costco
between 2012 -2013 has been in the top 10 with a retail revenue growth of 11.5% and a return on
assets of 6.5% with retail revenue from foreign operations at 27.6% just below Wal-Marts
29.1%. Based on the Costco annual report for 2013 the 52-week fiscal years net sales saw a rise
of 6% to $103 billion. This was a historical event for the company and the first time
outperforming the figure of $100 billion. The average annual sales per warehouse also increased
positively to $160 million. (Figures Costco Annual Report 2013)
The stock price was really expensive when bought on the 19 th of September 2014 at 126.79
given its P/E of 28.30. Yahoo Finance lists the beta as low as 0.46 which is very low. Please see
the below table of the top 10 Share of the top 250 retailers across the globe.
Figure 5: top 10 Share of the top 250 retailers across the globe.
Figure 6: Source www.yahoo/finance/. COST Interactive graph 2014 as at the 17 th October 2014
21:00.
Final Notes: Costco profit and loss = $15,540.00 (12.25%).
Lululemon is a high-end sporting goods retailer including fitness goods for healthy lifestyle
activities and distributes athletic goods and accessories for women, men, and Youth.The
Company has stores in the United States and in Canada, and also has extensive wholesale
business through health and fitness clubs. The below graph displays Lululemon stock market
comparison with its major rivals Adidas (purple), Nike (blue) and Gap (pink). Lululemon stock is
represented by the candlesticks and shows similar trend to Nike but outperforms Gap and
Adidas. I choose this stock as it compares well to and outperforms many other rivals such as
Nike. The P/E ratio however is high at 42.47 you could argue that higher quality companies tend
to display a higher P/E but as a gauge on its own does not give the full picture. Based on
Lululemons quarterly annual returns for the 1 st qtr and the 2nd qtr for 2014 at 0.34 per share and
0.39 respectively indicates further growth is expected into 2015.
seen from the below. A rise above the major high at $13.09 signals the potential for another
advance.
Final notes: Avanir Pharmaceuticals, Inc. (Ticker AVNR) Profit & loss for portfolio = Profit
$5,193.00 (51.60%).
Final Notes: The above graph shows the Alibaba stock. The brown line represents the index and
the green line represents EBay Inc. From the graph I marked a yellow point to show the price of
$91.96 where alibaba breaks the EMA (red line) where I bought the stock for 91.97 and
thereafter saw huge gains for my portfolio. The profit and loss for BABA for my portfolio =
$13,100.00 (14.2%).
the stock as I predicted the stock to rise. News later followed in coming weeks that Clorox was
leaving the Venezuelan market (source Morningstar.com) which had a price freeze for the last
number of years. With my added delight of this news I reached further into the news on the
stock via yahoo finance, stocktrak and Reuters who expected to see some kind of merger or
acquisition to occur possibly by one of its larger its competitors Procter & Gamble or Unilever.
Final notes: The trend line support resistance (bottom green line) in the end of September to
October roughly around $80 or $90 provided excellent signals of support in a gradual trending
price. However I waited too long to buy on an uptrend as I over judged the candle stick at close
on the 23rd of September to be a sign of the stock falling back to the old support line. I bought
around the higher end of the support trend line level at $97 to limit any further losses in any
gains. Ideally I should have bought earlier possibly around $90.00 to $95.00 and if I could
place a stop order below the trend line support and take a bit of profit for the portfolio. Profit
and loss for the buy and hold account = $2,151.00 (2.4%). I also earned a dividend from the
company in later months for 0.74 per 100 shares = $74.
Figure 13: Transaction History and Market value as at the 8th December 2014 via csv file
(www.stocktrak.com). The losses are in the red and any gains in Green.
P/L %
Figure 14: source John Ryan Excel 2014 - 20 stocks view of P/L %.
Profit/loss
20,000.00
15,000.00
10,000.00
5,000.00
0.00
-5,000.00
-10,000.00
-15,000.00
-20,000.00
-25,000.00
-30,000.00
Stock
Figure 15: Source John Ryan 2014 excel P/L total amounts.
signal to the investors to sell at that price as a decline is likely. The opposite applies for a double
bottom.
Double Top
The below candlestick chart makes the two sticks in the bar charts into a rectangle. It is in
rectangular shape in red or black depend on the open and close price of the stock. If the closing
price is higher than opening the box is black while if open price is lower than closing price, the
box is red. According to Marshall et al (2006) A candlestick is a graphical representation of the
days open, high, low and close Prices. Japanese candlesticks are otherwise known as a single
lines with forecasting ability and it is said to be a single line that indicates further price
increases based on prices that open at the lowest price that day and rise during the day when the
market is open to close at a high.
of the moving average to get a basic idea of the flow of the price and where the movement is
likely to end up. If the moving average shifts upwards and price is moving up overall a shift
downwards obviously indicates the price is moving down overall.
I mostly used a 50-day or 100-day moving averages to act as support lines to see if a price is
going to spring off the moving average line as it acts like a floor. The opposite can apply for the
downward moving trend forming a resistance when the price hits it and then starts to decline
once again. A moving average is the average price range of a stock for a specific point in time.
The drop in the price below it is a bearish sign and is a clear indicator to sell your stock. The
break above the line indicates a buying opportunity and is known as a bullish signal.
The On-balance volume (OBV) is a measure of trading volume and was extremely useful to me
to find out the levels of money that is taken in or going out of a certain stock. It assisted me in
my analysis of alibaba for the buy and hold account the OBV helped to determine whether the
BABA stock was oversold or overbought. In the graph below high volumes are indicated by the
large green bars below the chart. If the OBV starts to drop investors are starting to sell out their
position in that stock. This type of indicator is a good tool to judge what is happening with a
stock.
The relative strength indicator (TSI) also helps to determine if a stock is overbought or oversold
meaning compared to a second stock or an index. The strength index measures the strength or
weakness of a stock when it is compared to itself over a period time. It has a band that ranges
from 0 to 100 on a vertical scale. In the case of the Alibaba stock between the 20 th and 27th of
October 2014 we saw the NYSE fall while the company was rising which meant that Alibaba
was strong relative to the stock exchange.
My most used technical analysis technique is to use a combination of the EMA & SMA for a
stock that applies more weighting to the most recent prices. I usually input a 50-day Simple
Moving Average and a 50-day Exponential Moving Average alongside each other on the same
graph for a stock to see the different reaction to the price changes, due to the additional
weighting on recent price data I prefer to study the EMA.
Fundamental Analysis
Suresh (2013) mentions that fundamental analysis is the combination of industry, company and
economic environment analysis gaining an understanding of the stocks honest real value called
intrinsic value and the sound condition of the company. Stock prices are often under or
overvalued however fundamental analysts believe that if the real value of the company is not
equal to the current stock price a situation of overpricing or under valuing is taking place.
Additionally Suresh (2013) sees that the current market prices will usually trend towards the real
value. For the second buy and sell active account I attempted to calculate the real value of
companies to decide whether to buy the security or to pass and move on to the next security. I
found myself adopted a defensive approach and analysing companies down to the finer financial
details and scrutinising each price assuming that it is overvalued encouraging me to explore the
real valuations.
As a fundamental analyst in this account I looked to capitalize on perceived price. One tool is the
income statement or the companys annual report for the previous years reaching back into prior
years gave an abundance of information and records of companys sales, operating expenses, and
earnings. This gives a quick idea about whether I should put money into the company or not. For
example, if the sale of the company increases by 18 percent or more each year then a growth
investor should invest in the company as this trend will be expected to continue into the future.
Sometimes however calculations declared by company CEOs can be inaccurate especially in
relation to earning on each share.
The earnings per share (EPS) are readily available for most stocks. It is calculated by dividing a
companys after-tax profit by the outstanding shares. For most of my trades in this portfolio were
located by means of Yahoo finance taking the quarterly or annually EPS of a company. My best
indicator when looking at EPS Stock is to watch for increases in value of earning from year to
year. Warren Buffet only buys companies with trailing P/Es of 10 or less. However I feel that
when undertaking the fundamental analysis for stock I began to think like many of the growth
investors and buy stocks with high P/E as it is common that companys earnings will improve in
the future returning the P/E to a reasonable level. As indicated in the previous buy and hold
account discussion the P/E as a standalone indication of a good stock to buy is not concrete in its
determination a number of variables are need to make a good judgement.
Hedging Strategies
Options
I decided to use some hedging techniques for many of my stocks for this account. The use of
options contracts allowed me to have an agreement that gives me the rights to purchase stock or
other financial instruments at a defined price within a specific time frame
I used both the call options and put option for common stocks. Call options are options to
purchase, and put options are options to sell. A normal one stock option contract represents
contract size of 100 shares of common stock. I learned that a call option cannot sell for more
than the underlying asset and a put option cannot sell for more than the strike price. An option's
intrinsic value is a lower bound for an option's price.
A put becomes more valuable as the price of the underlying stock depreciates relative to the
strike price. For example, if I had one January 2015 Telsa Motors put of 10, I have the right to
sell 100 shares of Telsa Motors at $10 until Jan 2015. If the shares did to fall to $5 when I use the
option, I can buy the 100 shares for $5 in the market and sell the shares to the option broker for
$10 each, which means I made $500 on the put option. Call options on the other hand gave me
the right to buy the stock if I choose to and make a profit on a call when the stock increases in
price.
The expiration date is the time left over on an option just before I had the right to exercise a put.
At expiration, if the price of the stock is lower than the strike price of the options. The put strike
price as per the above diagram is basically the price for which you can sell a stock at a future
point in time if I wanted to.
Futures Trading
Futures trading refers to very specific characteristics of an asset. I decided to partake in futures
trading for account two so it doesnt necessarily involve me having to make daily trading
decisions about what commodity to buy or even sell. For example if I was expecting a price of
that commodity in question to double in price over a given time frame profits can be made with
buying futures contracts. My overall aim was to forecast the direction and timing of the price
change as the contracts if they eventually reach a higher price can be sold on to retrieve a profit
for my portfolio. However I saw prices decline rather than increase on a regular basis as the
commodities were difficult to judge resulting in a losses which I tried to minimise as much as
possible. Short hedging is a strategy used where a short position is taken out on a futures contract
and can be used by the investor who will view that the price will decrease over that period.
The concept of backwardation option occurs when trading with futures. It can be identified if a
futures contract is well below the spot price it will then increase as prices eventually converge
with the spot price as the expiration of the contract get closer. On many occasions the Storage
costs along with interest rates account for the difference between the spot prices. When trading
oil contracts I rule I took when experiencing backwardation was to hold a long position.
.
1. Dresser-Rand
I choose this stock with the potential to perform my first fundamental strategy calculation. The
company manufactures compressors and turbines to serve the oil and gas industry mostly in
North America and Canada as the drilling boom boosts demand for equipment. The Companys
revenue according to its financial statements for 2013 is expected to grow in size over the next
few years. Dresser Rand are operating in an expanding industry with expanded market
opportunities such as new markets such compression systems, liquefied natural gas and CAES.
News in Late September of Siemens and Pump manufacturers Sulzer are interested in taking
over the company as it has a market cap of $6 billion dollars sparked my interest.
I bought 100 shares in total at $81.15 with a market value 10,115.00
.
Figure 25: Dresser -Rand Fundamental Analysis John Ryan excel 2014. Calculations of PV are
based on Formulas provided by Investopedia.com.
The goal of analyzing this company's fundamentals and company details is to determine the
stock's intrinsic value or in other words its real actual value not the value currently displayed in
the market. The intrinsic value for the company displayed in the above table of the current share
price for the company shows that the stock is worth more than its price at an intrinsic value of
$6,940.58 much higher than the PV of $5448.79 and on that basis would make sense to buy the
stock.
I carried out the calculations based on a discount factor = D=1/ (1+P) ^ N. Firstly I calculated
the total sum of the discounted future cash flows from 2013 to 2017 five years
And got residual value by adding sum of the future cash flows from starting six years from
present year. According to the Dresser- Rand annual report for 2013 the company is assumed to
grow at 18% a year for the first 6 years and then 8% every year after that 2018 and beyond.
I added the first five yearly cash flows and discounted each back to year zero. Once I got the
present value for the first five years I calculated the value of the cash flows from the sixth year
and all the following years expecting the growth rate to be 8%. The cash flows from all these
years are discounted back to 2017 added together, then discounted to year zero, and finally
combined with the PV of the cash flows from years one to five.(Source:www.Invsetopia.com)
Please see the below table for the calculation to discover the Discount factors and capitalisation
rate.
D=1/(1+P) ^ N
Year
2016
- Year 3 - 2015
D=1/(1+P) ^
N
D=1/(1+0.0052)^60 D = 1/(1 +
0.0052) ^ 48
D= 1/(0.0052)^60
D=1/1(0.0052
) ^ 48
4X12 = 48
5x12 =60
D= 1/(1.3650) =
Year 2 - 2014
Year 1 2013
D=1/(1+P)^ N
D=1/(1+P)^ N
D=1/(1+P)^ N
D = 1/(1 +
0.0052) ^ 36
D=1/( 0.0052) ^
36
D = 1/(1 +
0.0052) ^ 24
D = 1/(0.0052)
^ 24
D = 1/(1
0.0052) ^ 12
D=1/(0.0052)
12
3X12 = 36
2X12 = 24
D= 1/1.2826 D=1/1.2052836
D=1/1.1325555
+
^
1X12 = 12
D=1/1.0642159
0.7326
= 0.77
8 = 0.82
6 = 0.88
4 = 0.93
4. Intel Corporation
I found that a number of factors could see an upside of $49.20 a share compared to the
price I paid $34.57 and there was a clear channel upwards in the trend. Buying at the
maximum resistance level I realized that the price may fall soon after back to the support
line and this was a mistake on my part as I could have bought the stock at a much lower
price at possibly $33.8 as the upward trend continued above $37 and $38. The stock was
then sold for a price just above the price I paid for a profit of 131.50 to minimise any
future losses. However it was a fair price for a company that has operating margins of
25% and generates $6 billion a year in free cash flow. The earnings per share however are
very low at 2.10 and the P/E is getting close to 20 but still reasonable. The beta sits at 0.9
at low risk levels.
penetrates the upper band between the 24th of November and 1st of December which was also
a signal to buy which confirmed that my decision was correct to buy even though the price
did fall back to around 8.3 and I was breaking even for a number days after that. I had little
gains on this trade as a result selling for a minor profit of 551.30.
Options Transactions
Transaction Type/Security
Symbol
TWTR1420X33.5
FB1420L79
AAPL1426L114
Company Name
QTY
Price
Comm.*
Amount*
Twitter Inc
20
0.36
-50
-720
Facebook Inc
12
0.37
-50
-444
1.5
-50
-150
Apple Inc
Orders Made
108
Profit Short
$2,265.00
Transaction
Type/Security
Company Name
QT
Y
Price
Comm
.*
Amount*
10
0
115.09
-50
11,509.00
2.37
-50
-412.5
10:58 AM
11/06/201
4
1:40 PM
11/05/201
4
FATSTOCK NOV 14
1:52 PM
11/05/201
4
10
0
121.5
-50
12,150.00
1:48 PM
11/04/201
4
Apple Inc.
10
0
108.5
-50
10,850.00
2:36 PM
11/04/201
4
-50
13.93
696.5
2:34 PM
11/04/201
4
10
0
237.76
23,776.00
2:33 PM
11/04/201
4
Intel Corporation
50
34.57
-50
-1,728.50
2:32 PM
11/04/201
4
10
0
104.69
-50
10,469.00
2:30 PM
11/04/201
4
SILVER DEC 14
-1
16
-50
-6,175.00
2:29 PM
11/04/201
4
PUMA BIOTECHNOLOGY
-51
240.14
-50
12,247.14
2:28 PM
11/04/201
4
10
0
1.71
-50
171
2:27 PM
11/04/201
4
-30
5.03
-50
150.9
10:32 AM
11/04/201
4
FATSTOCK NOV 14
-1
2.36
-50
10:31 AM
RYANAIR HLDG.
25
0
8.31
-50
-2,628.24
11/04/201
4
10:25 AM
11/04/201
4
FCOJ-A NOV 14
-1
1.3
-50
-217.5
10:21 AM
11/04/201
4
FCOJ-A NOV 14
1.32
-50
10:19 AM
11/04/201
4
-50
81.67
-50
4,083.50
10:17 AM
11/04/201
4
WHEAT DEC 14
-3
5.32
-50
-1,912.50
10:17 AM
10/30/201
4
PALLADIUM 1 UZ DEC 14
-1
793.5
-50
-110
10:45 AM
10/30/201
4
Yahoo! Inc.
-20
45.28
-50
905.6
10:45 AM
10/30/201
4
-40
84.68
-50
3,387.20
9:48 AM
10/30/201
4
10
0
35.72
-50
3,572.00
7:45 AM
10/30/201
4
WHEAT DEC 14
5.45
-50
7:45 AM
10/30/201
4
WHEAT DEC 14
-2
5.45
-50
1,850.00
7:44 AM
10/30/201
4
COCOA DEC 14
-1
2,923.00
-50
-1,710.00
7:43 AM
10/30/201
4
MILK JAN 15
-1
18.22
-50
180
7:43 AM
10/28/201
4
COTTON DEC 14
-1
0.65
-50
400
2:51 PM
10/28/201
4
BCOLDC DEC 14
86
-50
-410
2:48 PM
10/28/201
4
10
0
35.49
-50
-3,549.00
2:42 PM
10/28/201
4
40
84.76
-50
-3,390.40
2:37 PM
10/28/201
4
Costco Wholesale
Corporation
-50
130.7
-50
6,535.00
2:37 PM
10/28/201
4
10
0
113.13
-50
11,313.00
2:34 PM
-10
4.82
-50
48.2
10/28/201
4
2:31 PM
10/28/201
4
PALLADIUM 1 UZ DEC 14
794.6
-50
2:30 PM
10/28/201
4
SILVER DEC 14
17.23
-50
2:28 PM
10/28/201
4
COTTON DEC 14
0.64
-50
2:24 PM
10/28/201
4
MILK JAN 15
18.13
-50
2:23 PM
10/28/201
4
-1
1.69
-50
760
2:21 PM
10/28/201
4
eBay Inc.
15
0
51.1
-50
7,665.00
2:19 PM
10/28/201
4
-20
103.8
-50
2,076.00
2:18 PM
10/28/201
4
Minerva Neurosciences
10
0
4.5
-50
450
2:17 PM
10/28/201
4
10
0
97.63
-50
9,763.00
2:13 PM
10/28/201
4
WHEAT DEC 14
5.3
-50
9:42 AM
10/27/201
4
Microsoft Corporation
-60
45.99
-50
2,759.40
12:00 AM
10/23/201
4
Dividends Equities
10
0
100@0.7
4
74
12:19 PM
10/23/201
4
-60
27.55
-50
1,471.83
11:54 AM
10/23/201
4
eBay Inc.
15
0
50.84
-50
-7,626.00
9:46 AM
10/23/201
4
Avanir Pharmaceuticals
Inc.
20
0
11.93
-50
-2,386.00
9:46 AM
10/23/201
4
10
0
99.16
-50
-9,916.00
9:39 AM
10/23/201
4
Costco Wholesale
Corporation
50
131.16
-50
-6,558.00
9:39 AM
10/23/201
4
10
0
106.71
-50
10,671.00
9:39 AM
50
81.15
-50
-4,057.50
10/23/201
4
9:31 AM
10/22/201
4
-50
3.66
-50
183
11:29 AM
10/22/201
4
Microsoft Corporation
60
44.6
-50
-2,676.00
11:27 AM
10/22/201
4
JPY/USD DEC 14
-1
0.93
-50
-687.5
11:25 AM
10/22/201
4
International Business
Machines Corporation
-15
163.47
-50
2,452.05
11:25 AM
10/22/201
4
Facebook Inc.
-30
79.49
-50
2,384.70
9:37 AM
10/22/201
4
20
101.14
-50
-2,022.80
9:30 AM
10/22/201
4
Fortis Inc.
30
46.5
-50
-1,242.11
9:30 AM
10/22/201
4
50
0
0.39
-50
-173.63
9:30 AM
10/21/201
4
60
28.48
-50
-1,521.52
7:48 PM
10/21/201
4
AUDLK DEC 14
-1
0.87
-50
-290
7:41 PM
10/21/201
4
Metlifecare Limit
90
4.36
-50
-308.7
12:40 PM
10/21/201
4
10
0
1.8
-50
-180
12:36 PM
10/21/201
4
1.68
-50
12:34 PM
10/21/201
4
WHEAT DEC 14
5.22
-50
12:33 PM
10/21/201
4
10
5.06
-50
-50.6
12:31 PM
10/21/201
4
BRL/USD NOV 14
-1
0.4
-50
-585
12:31 PM
10/21/201
4
50
2.54
-50
-127
12:31 PM
10/21/201
4
Minerva Neurosciences
10
0
4.35
-50
-435
12:24 PM
Facebook Inc.
30
77.98
-50
-2,339.40
10/21/201
4
12:09 PM
10/21/201
4
PUMA BIOTECHNOLOGY
20
228.13
-50
-4,562.60
12:05 PM
10/21/201
4
JPY/USD DEC 14
0.94
-50
12:03 PM
10/21/201
4
AUDLK DEC 14
0.88
-50
12:00 PM
10/21/201
4
Yahoo! Inc.
20
39.86
-50
-797.2
11:59 AM
10/21/201
4
30
6.27
-50
-188.1
11:53 AM
10/21/201
4
-40
8.3
-50
332
11:47 AM
10/21/201
4
Costco Wholesale
Corporation
-15
130.17
-50
1,952.55
10:51 AM
10/21/201
4
International Business
Machines Corporation
15
162.06
-50
-2,430.90
10:27 AM
10/21/201
4
-2
88.69
-90
-4,330.00
9:49 AM
10/21/201
4
40
8.66
-50
-346.4
9:49 AM
10/20/201
4
PUMA BIOTECHNOLOGY
30
226.91
-50
-6,807.30
8:27 PM
10/20/201
4
HT-OIL NOV 14
-2
2.48
-90
-630
9:35 AM
10/17/201
4
Costco Wholesale
Corporation
15
125
-50
-1,875.00
12:42 PM
10/17/201
4
HT-OIL NOV 14
2.49
-90
12:37 PM
10/17/201
4
BRL/USD NOV 14
0.41
-90
12:22 PM
10/17/201
4
PUMA BIOTECHNOLOGY
223.48
-50
-223.48
11:58 AM
10/16/201
4
SOYBN NOV 14
-1
9.58
-90
-625
6:00 PM
10/16/201
4
BCOLDC DEC 14
-1
85.59
-90
90.87
-90
6:00 PM
10/16/201
4
5:14 PM
10/16/201
4
90.84
-90
12:09 PM
10/15/201
4
COCOA DEC 14
3,094.00
-90
10:04 AM
10/15/201
4
SOYBN NOV 14
9.7
-90
10:01 AM
10/15/201
4
COCOA DEC 14
-1
3,131.00
-90
-320
COCOA DEC 14
3,163.00
-90
9:55 AM
The overall performance of both portfolios include a final profit of $9,471.61 for the buy and
hold strategy and a long profit of $2,748.16 for the second buy and sell account. This is profit is
insignificant given the volume of cash available totalling $1,000,000 for each account.
TWTR, AMZN and CNET stocks were purchased for the buy and hold account and in hind sight
purchased based on volume and influence from other factors other than technical or fundamental
strategies which proved to be a critical mistake and proved to contribute huge losses over the life
of the account. However I did learn from these mistakes and started to turn theory into practise. I
studied more into how to make a put gaining on the down side of prices, limit loss with stops,
trade options. I enjoyed the exposure to new trading activity such as commodities and although I
could not utilise my new skills to make large profits with futures and options I learnt how to
hedge. A major highlight of the report is conducting forensic analysis of the Dresser Rand stock,
analysing the company financial health gave me a better understanding of the company stock
valuations and contributed to my overall business intelligence. It was interesting to work out the
various calculations of determining if a company is over or under valued and it gave me great
satisfaction.
In regards to the rankings I started off well at 10 spot but gradually dropped to within the top 20
consistently. I learned that even if new products launched that are likely to increase companys
sales and earnings may not signal that the companys stock may be a good buy. The overall
lesson of the portfolio was that not a single aspect of the fundamental analysis or technical
analysis by itself can be a good predictor of the companys future. It is more of a combination of
all the factors.
The most effective strategy during the simulation turns out to be buying defensive and with
growth stocks in mind. First of all, buying defensive stock is a safer way to gain at least a small
profit during a long term investment. Anavir, Apple and Puma Bio Technology are one of many
these stocks with high growth and acceleration. A defensive strategy saw small profit with HSY
being in the sector of food processing and distributing it is a great defensive stock.
Although I had a great deal of difficulty with stocktrak when trying to process future options and
options generating error messages and freezing continuously. I also experienced situations where
I wanted to make an option trade and the trade would be missed by stocktrak and would never be
accounted for. It was a great way however to get an insight to economics and the general
understanding of the markets. I enjoyed the interaction with mu fellow students in regards to
discussions on stock selection.
In a previous job I had a role of updating the ISE website with fund announcements without
really having an understanding of the impact these announcements have on the overall price of
the company as I was not partaking in the markets. This simulation game give me a real life
market situation to learn from without fear or risk of huge losses and I benefited greatly from
analysing finances in great depth and improving my commercial awareness.
Unlike the buy and hold account the strategy for buying and selling stocks as prices move and
not let the stock just sit for months was more of the learning curve for me. I studied some market
timing investors who can sell or buy stocks whenever they feel it is worth to do. There are also
some problems with the market
Timing strategy one cannot always predict the rise or fall of the stock price at will, since it is
easy for you to make wrong correlations between the current market conditions and the past
stock prices by applying technical analysis.
My most successful tools used for stock selection was with the moving averages and the use of
support line and resistance lines to judge a direction of the stock. I had massive enjoyment and
interest in studying the futures and NASDAQ indices. I would of liked to of traded some
currencies however the volume at times was enough to make any significant money. I did buy
some BRL for November but made no money just lost commission as I did not understand the
right strategy to approach this type trade.
My philosophy of the stock the market is to be defensive, invest in growth and keep the
emotional decisions away from the stock market. After analyzing and comparing my portfolios
each week, I eventually saw the key to the stock market which is simply converting risk into
opportunity by applying specific investing strategies. However, the risk is always changing into
different forms as the world and commerce develops with a new set of risk factors that need an
alternative way of analysing therefore we would be wrong to be controlled by a single way of
looking at stocks that cannot be wisely controlled by any single investing strategy for every
strategy has its own.