Study On A Portfolio Simulation Exercise Finance Essay

The portfolio simulation exercising gave me the chance to develop and heighten my ability to carry on an investing. Throughout the three month where I have to either purchase or sell, I was able to accommodate what I have learned in category and utilize it as a usher to pull off my investing. I approached each hebdomad with different schemes. My chief thought was to purchase when stock monetary values are low and purchase when the monetary values are high. At times, I had trouble happening information about dividends and other peculiar stocks. However, with a ton of research on dividends and stocks, I was able to carry through what I have started. I had additions and losingss. During times when the stock market was non making really good, I decided to purchase. Hoping that in the undermentioned hebdomads to come, the market would travel up. The most of import thing I can state is that I have learned so much from this exercising.

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Portfolio Simulation Exercise

One of the greatest experiences I can state that I have gotten out of this category ( Investment ) was likely the cognition sing the purchasing and merchandising of stocks. At first, the lone think I knew was to purchase low and sell high. My cognition about the peril of stocks, stock industry variegation, dividends, and other investing schemes were limited. My cognition were merely limited to what I have learned in the old finance category. Throughout the three months of the portfolio simulation exercising, I was able to get basic investing processes from category, learn from it, and accommodate it to outdo tantrum what I think will give me the best return.

Without any hints as to what I was making, I bought stocks from Coca-Cola Company ( KO ) , Google, Inc. ( GOOG ) , Bank of Hawaii ( BOH ) , McDonald ‘s Corporation ( MCD ) , and DirecTV ( DTV ) . At that clip, my scheme was to purchase stocks that were normally used and or popular and at the same clip would give me a immense return. A web site called thestreet.com ranks stocks on a day-to-day footing and I used that as a usher. Harmonizing to thestreet.com, Bank of Hawaii, the Coca-Cola Company, and McDonald ‘s Corporation ranked A. A stock that ranks A ( excellent ) means that “ the stock has an first-class path record for maximising public presentation while minimising hazard, therefore presenting the best possible combination of entire return on investing and reduced volatility ( thestreet.com ) . I chose Google Inc, because Google is a long-run growing industry that dominates all the other hunt engines. DirecTV was at that clip a worthy company to put in chiefly because of its popularity. The dealing went as follows:

Out of the $ 50,000 fanciful money, I was able to put $ 46,478.60 and had a staying balance of $ 3521.40.

September 07, 2010

The option was to either sell or purchase. I sold all of my DirecTV stock because at that clip DirecTV was the lone stock that would give me a return on my investing. Since I bought 70 portions at $ 37.88 and sold it $ 39.88 per portion, my addition was $ 140.00 and the entire hard currency influx of $ 2,791.60. I earned involvement on the hard currency available from August 31 which is $ 3521.40 times the involvement per twenty-four hours of 0.00008 and I have held the hard currency for 9 yearss. The amount of my entire hard currency influx and the involvement earned on hard currency available totaled up to $ 6,315.54. With this sum available, I decided to purchase Trina Solar Limited ( TSL ) . The logic behind purchasing Trina Solar Limited was that solar is now popular and is one of the commonly used solar systems in California. I used up my hard currency available ( $ 6,315.54 ) and bought 70 portions of TSL at $ 27.55. After this dealing I merely had $ 4,387.04 left on manus.

September 21, 2010

Before the trading day of the month, on September 20, 2010, I sold half of my Google, Inc. portions chiefly because the monetary value went up from $ 452.69 to $ 508.96. The lone ground why I sold it was because I was afraid that the stock monetary value might travel down. At that clip, the leap will give me a immense addition. I sold half chiefly because if the monetary value continues to lift, I will be able to sell off the other half for a more return. There were two cardinal developments that made Google ‘s stock monetary value to increase. One, Google Inc. and AOL Inc. are in the procedure of spread outing. Their enlargement will include nomadic hunt and YouTube. The partnership between GOOG and AOL Inc. includes characteristics that will better the merchandises and services offered to consumers. Two, NIIT Limited which is an Enterprise Learning Solution Company, revealed the launch of the Advanced Online Advertising plan designated for advertisement and selling professional in coaction with Google India. Since the stock was up, I sold 35 portions of GOOG at $ 508.96 which totaled up to $ 17,813.60 which included a addition of $ 1,969.45. I besides earned involvements on the hard currency available from September 09, 2010. The hard currency influx from September 20 and the 11 yearss involvement plus the hard currency available totaled up to $ 22,204.50. Since I could non hold more than $ 10,000 hard currency on manus, I bought 200 portions each from Continental Airlines, Inc ( CAL ) and Hasbro, Inc ( HAS ) .

After this dealing, I was left with $ 8,500.50 available on manus. Continental Airlines was in the procedure of unifying with United Airlines. This amalgamation might do the stock monetary value to travel up therefore ensuing in a addition for me. Hasbro ( HAS ) is one of the well known American plaything trade name. HAS offers merchandises to assorted clients such as jobbers, distributers, concatenation shops, price reduction shops, etc. Since the Christmas season is merely around the corner, Hasbro ‘s income might travel up doing its stock monetary values to increase every bit good.

October 05, 2010

All of my stocks were non giving me the addition that I was anticipating. However, GOOG increased from the old $ 508.96 to a new high of $ 531.87. Sing that immense leap, I sold merely 5 portions because I was trusting that by the undermentioned hebdomad GOOG ‘s stock monetary value might increase once more. This dealing entire hard currency influx was $ 2659.35 which includes a addition of $ 395.90. The amount of my entire hard currency influx plus the hard currency available from Sept 20, 2010, and the involvement earned totaled up to $ 11,168.69.

October 19, 2010

After all the dealing done on October 5th, I ended up with $ 11,168.69 and I was non able to purchase any stocks. October 19 was likely the worst twenty-four hours to merchandise chiefly because the stock market was down. I could non sell because I would stop up with a immense loss. All the stocks that I bought were selling at a monetary value lower than what I originally bought them for. The $ 11,168.69 with 13 yearss involvement gave a amount of $ 11,180.92. I used that money to purchase portions from the Goldman Sachs Group, Inc. ( GS ) .

I ended up with $ 180.42 available on manus. I bought GS chiefly to diversify my portfolio. GS is a world-wide company that provides a assortment of investing banking, securities, and investing direction services to corporations, fiscal establishments, authoritiess, and high-net-worth persons. Due to its world-wide association and because during this twenty-four hours the market was down, it seemed logical to put in GS because if the market is down in the U.S. , GS might be gaining net income from other international entity.

November 02, 2010

Within three yearss till the last trade day of the month, I decided to purchase a really hazardous stock with the outlook of a immense return. As a consequence, I sold two of my stocks that were making really good. I sold all the portions I had for the Coca-Cola Company ( KO ) and McDonald ‘s Corporation ( MCD ) .

The entire hard currency influx from both these stock summed up to $ 9,832.20 which included a combined addition of $ 821.10. Besides, uniting the $ 9,832.20 with the hard currency available from October 19 with involvement earned totaled up to $ 10,012.81. Then, I bought portions from a hazardous company called Imax Corporation ( IMAX ) . I got this thought from an article I read sing a really hazardous stock that within one twenty-four hours, the addition on the return was tremendous. I chose IMAX because it has a beta of 2.01 which is riskier than the overall market.

After this dealing, I ended up with $ 4,180.31 available on manus.

November 04, 2010

This is the last trade twenty-four hours which means that every portion must be sold. It does non count whether the dealing would ensue in a addition or loss.

With the $ 50,000 fanciful money I started with, I ended up with a combined addition of $ 6,308.00. The lone stock that resulted in a loss of $ 102.50 was the IMAX. The undermentioned pie chart illustrates where most of my addition were coming from.

Dividends

Out of the 10 companies stocks that I invested in merely five gave quarterly dividends. They are as follows:

BOH had a quarterly dividend of $ 0.45, HAS had $ 0.25, KO had $ 0.44, and MCD had a quarterly dividend of $ 0.55. I was able to acquire two quarterly dividends for BOH, HAS, KO, and MCD because I held them for two quarters. All of these quarterly dividends are illustrated as “ Quarterly Dividend per Share. ” As a consequence, multiplying quarterly dividend with the figure of portions gave me the entire sum of dividend I was entitled to. However, I merely held GS for one one-fourth. Therefore, I got one one-fourth worth of dividend which is the $ 0.35.

Betas

Stockss with betas higher than 1.0 are more hazardous than the overall market. Stockss with betas less than 1.00 are less hazardous than the overall market. I could non acquire any beta for Continental Airline ( CAL ) stock because after October 31, 2010, the amalgamation between Continental Airlines and United Airlines are concluding and they will be merchandising under a new heart called United Continental Holdings Incorporated ( UAL ) .

Worst Security

The worst security that I had to cover with was the Continental Airlines, Inc. and after October 31, 2010, I could non happen any information sing the Continental Airlines stock. However, after many researches I found out that Continental stock remained unchanged ( UNCH ) at $ 24.84. The return I was anticipating after the completion of the amalgamation between United Airlines and Continental Airlines did non travel as planned. Alternatively, the United-Continental amalgamation caused cases, brought in layoff, and higher menus.

Best Security

The best security I had throughout this portfolio simulation exercising was Google, Inc. I bought portions from Google Inc. at $ 452.69 and after three months it was up at $ 627.36. The combined addition I got from Google summed up to $ 7,605.45.

As shown in this chart, Google stock monetary values increased get downing from the month of September till the 2nd hebdomad of November so declined. Harmonizing to moneycentral.msn.com, the headlines of some of the cardinal developments of Google Inc. were “ Google Inc. And AOL, Inc Renew And Expand Global Partnership, ” “ NIIT Limited Launches Advanced Online Advertising Program, ” “ Binary Tree Exits Enterprise Partner Program With Google Inc. , ” “ Google Inc. Denies Oracle Corporation ‘s Android Copyright Complaint-Reuters, ” and “ Google Inc. Joins $ 5 Billion US Offshore Wind Grid Project-Reuters ( moneycentral.msn.com ) .

Decision

Throughout this simulation exercising, I was able to utilize what I have learned in category and use it to the portfolio simulation exercising. I am happy with my overall portfolio return because at the terminal, all of the stocks except for one gave me some additions. Merely the IMAX stock gave a loss of $ 102.50. I was anticipating a immense return but unluckily due to the current province of the U.S. economic system, my return was minimum. I should hold non invested in large companies like Coca-Cola and McDonald ‘s because the return was excessively little. Alternatively, what I should hold done is invest in hazardous stocks and in companies that are on the rise. The higher the hazard the higher the return. I started out with $ 50,000 fanciful money and at the terminal of the simulation exercising I had a loss of $ 102.50 and a entire addition of $ 6,308.00. I besides received dividends which add up to $ 326.10. The ground for such high dividends was that I held four stocks for two quarters. I bought them before their ex-dividend day of the month and held them until approximately two hebdomad before the following ex-dividend day of the month. These stocks are BOH, KO, HAS, and MCD. The amount of all hard currency influx plus dividends totaled up to $ 55,870.90. Basically, I started out with $ 50,000 and at the terminal I have $ 55,870.90 which includes dividends and involvement earned throughout the three hebdomads. It was a great experience and a good investing.

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