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Stocktrack Project

 

Introduction

This paper is the final report of the StockTrack project. The objective of this report is to report on the achievements of the project. For this purpose, it will explain what went well throughout the project and which decisions impacted the performance of the portfolio negatively. What factors contributed to the performance of the portfolio and the overall buying and selling strategy. It would also summarize my personal strengths and weaknesses. In the end, it would also explain what are the lessons that are learned through this project.

Achievements

Along with maximizing the portfolio’s values, another important purpose of this project is to get the sense of stock markets and how they function and learn the art. So in this regard, I made significant progress through studying in the class and then implementing some of those concepts in real-life scenarios through this project. So in this sense, it is itself a great learning curve and a personal achievement for me.

Regarding the portfolio, although the returns on the overall portfolio are quite low at 0.58% and are much less than what was the objective to start with, however, considering the very short time frame for the investment, it is still a better outcome of the exercise rather than losing the value. This is because there was very little time to invest and then even very little margin to change or improve on the strategies.

Then the stock market is impacted by several things that can be both economies related or company-related. However, due to a very small time frame, it was not possible to gain much from the changing scenario and sometimes a much longer time frame, around one year, is required to make significant gains and beat the market.

The companies selected were among the top companies in the market and the ones which had performed significantly better than the peers in the long run. However, I decided to not take many risks by investing any significant amount in the market and focused on learning as much as possible from the exercise. The summary of the final results after making the 33 trades is as follows,

Cash Related Items

Best Decisions

I have made several of the decision regarding investment and learning that proved very well and added to my knowledge, insights and learning the art of making the stock market investments.The returns on the companies that are part of my portfolio show that my selection of the portfolio was great. As apparent from the following table, most of the companies in my portfolio show significant gains with a majority exhibiting great gains in just a week and others.

Therefore, I would say that the best decisions I made were during the selection of the portfolio. I selected large stocks that were expected to do well on the basis of the historical performance and that pan out to be the case in reality as well.

As the trading window was very small, so holding stock was not as such a great option for long and I tried to make as much profit as possible on investment within the available window. It proved out to be a good strategy in that short window as overall my portfolio showed a gain of 0.58% inspite of very little investment. Had I took a lot more risk and invested huge sums in investment in the portfolio, my overall gains would have been a lot higher.

Company Name

In terms of individual investments, best decisions are to select the portfolio and then in terms of companies, investing in Nike and Tesla proved real masterstroke as these stocks appreciated very quickly after the investment.  Apple, Microsoft, Facebook, Home Depot and McDonald’s also provided significant gains.

Worst Decisions

Generally, my decisions regarding the portfolio went well. However, the investments in Netflix and Wal-Mart did not prove a success and I lost money on these investments. However, it may not be among the worst decision because they may regain the lost prices in the coming days.

The worst decisions I would say are that I sold some stocks very early. Like I Sold Apple Stock very early, just after one day to make a profit whereas I should have held it.

With regard to a portfolio, the worst decision apparently is to invest very little in the stock market and holding most of the investment in terms of cash just to play safe. I should have the investment of most of the cash in stocks. However, this is because I was not very confident about my portfolio as it was my first experience.

Factors Contributed to Performance

The major factor that contributed to the superior performance of the portfolio is the investor confidence as the stock markets are on an upward spree and are the performing best making new records. “While the market’s path is always unknown and could come back down before the calendar turns to 2020, the year looks like an opportunity lost for those who bought into the pessimism. The S&P 500 continues to climb to new highs, while its sister index, the Dow Jones Industrial Average, also set a new high-water mark Monday.”(Cox, 2019)

Another major contributing factor is the performance of individual companies as they are projected to do well in the current year and in the foreseeable future. For example, Apple’s stock is up because of the success of its new product launches.

Buying and Selling Strategy

The buying strategy was based on the comprehensive analysis and the resultant selection of stock. It was decided that I would invest largely in large-cap stocks. They are pretty much mature and are generally expected to do well. Then, further selection is done by reading the comprehensive analyst views of the stocks.

Then I started buying stocks on the basis of their potential to go upward in value in a short period of time. So that when they go up, I could sell them to earn a return and that was my selling strategy. That is why I sold some of the Apple shares on the very next day while retained some for further gain in value.

Summary of Strengths and Weaknesses

The most important strength for me is my research and evaluation skills. Then I am very good at finance as well. That is what contributed most to my performance in this project. Another major strength is my university degree in finance that I am going to get soon. This would help me in the long run in a successful career. Then, my stock selection abilities proved to be good on the basis of my analysis and finance knowledge.

I found two major weaknesses during this project regarding investment. First of all, I am risk-averse and that is why invested major investment in cash and then in large-cap stock. I need to increase my risk tolerance for better results in the future. Secondly, I lack experience in investment and investment analysis.

Lesson Learnt

The most important lesson I learned through this exercise is that always keep an eye on the big picture and the investment decisions are not stand-alone and all the relevant factors should be taken into account while investing.

Secondly, never invest too much in cash as the return on cash is much less than what you can get through investing in businesses.

Another important lesson is that one needs to take the risk in order to earn big.

And finally, learn from the successful investors and keep an eye on what analysts and experts are saying as the stock market is efficient and the share prices reflect all the available information and the analysts make decisions on the basis of all available information.

Conclusion

StockTrack project is a great project that taught me investment analysis and portfolio selection and investment in the stock market. My portfolio strategy was based on large-cap stocks and investing the maximum amount in cash in order to prevent any loss. In the end, I made some gains on my investments. The majority of the companies in the portfolio provided positive returns. However, I need to get rid of my risk averseness and need to learn to take a calculated risk for better investment performance.

Reference

Cox, J. (2019). The Stock Market Keeps Setting New Highs In A Rally No One Saw Coming. Retrieved from: https://www.cnbc.com/2019/11/04/the-stock-market-keeps-setting-new-highs-in-a-rally-no-one-saw-coming.html

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