Bus 410 – Financial Markets
Voluntary Extra Credit Project: Simulation Portfolio Management -Stock Selection and Security Trading
This is an optional project for extra credit to be applied to the “Total Grade” earned . Students who participate in this project according to the project guidelines will receive a 5% extra credit allocation towards the total grade. That is, if a student’s total grade is 90%, a 5% adjustment will increase the final grade to 94.5%. It is a pass/fail grade. That is, if I deem you have performed the exercise according to the guidelines and requirements as described herein, you will pass and receive the extra credit. If you fail to follow the program details, you will not receive any extra credit.
The purpose of this project is to allow you to develop your investment portfolio management skills during the course. The relevance to this course is that the stock market and investment activity of all types is heavily dependent upon, influenced by and controlled by participants in the Financial Markets and the Financial Institutions that are part of the Financial Markets.
You need to first register at www.stocktak.com. Instructions follow. There is a student fee of approximately $27.
You will be granted $500,000 of initial investable cash. You must select stocks from a minimum of 5 different industries (such as Technology, Health Care, Financials, Utilities, Energy and Natural Resources, Retailing, Manufacturing, etc.) . You should invest no more than 10% of your $500,000 initial investable capital in any one stock and no more than 30% in any one industry.
You will be allowed up to 200 stock trades during the program period of 10 weeks. You can register on August 25, 2016 and all participating students must be registered by September 1, 2016. There are some guidelines including a maximum investment of 20% of your $500,000 in one stock. . The commission on stock trades will be $10.00 per trade and you can make up to 200 trades during the project period.
To register, click on https://www.stocktrak.com/members/registerstudent?className=Fin%20Markets%20F16
on this link. The web site is www.stocktak.com. On the home page click on the “students register here” button and input Fin Markets F16 (exactly like that) as the class name. There is a student fee of approximately $28 for participation on Stock Trak paid directly to Stock Trak..
“Students have 24/7 access to our extensive FAQ section, they can submit questions online, chat with a customer service representative or call our customer service during the hours of 9:00 a.m. to 5:30 p.m. ET. During these hours students calling in will be speaking to a live support agent who can give quotes, or answer any technical or support question about their account.”
The project grade will be based on your efforts at constructing and managing your investment portfolio.
1.Due: September 8 handed in in class. Each student to submit a statement of your investment profile and objectives. You will be able to develop your investment profile and objectives after my presentation about Managing an Investment Portfolio. . Although the primary portfolio management goal is maximization of the investment return, your profile and objectives should incorporate specifics such as specific rate of return targets, risk appetite,, stock allocation limits and targets, macroeconomic indicators that you will watch, market trends analysis, industry knowledge and more.
2.You will be required to submit an email to the instructor weekly by 9pm of every Sunday night starting Sunday September 11, a summary of your portfolio performance that week including an explanation of the trades that you made and an explanation of your rationale for each trade. Your rationale should correlate to your stated investment profile and objectives created at the beginning of the project.
3. Retain a record of the sources of information that you used to make your investment decisions during the project including copies of articles, analyst reports, annual reports, quarterly reports, etc. I may ask to see the information that you used to make a stock purchase or sale.
4. Due by November 20 by 9pm. Submit a Final Report detailed analysis of how your portfolio performed during the project period. Your base line for assessing your performance should be your Investment profile and objectives crafted at the beginning of the project. You analysis should state how you made your decisions on trades and investments and what the factors were that led to your decisions. Decision factors include those contained in Constructing and Managing a Portfolio presentation that I made at the beginning of the semester and involve industry trends and developments, company earnings, economic developments, competitive challenges or opportunities, merger and acquisition activity and more. Your grade will be based on how much analytical effort and consistency of rationale vis a vis your investment profile and objectives at the outset that you put forth as summarized in your Final Report.
Also include in the Final Report, answers to the following questions:
1. Given your experience with this portfolio construction and management and your investment profile and objectives, what would you do different if you could start over, if anything.
2. What were the 2 or 3 most interesting, difficult or surprising aspects of managing your portfolio relative to dealing with stock price performance (changes) during the term?
3. What were the most accessible and helpful sources of information that you relied on to assess your stock performance to assist you in making trade decisions.
Ray Melcher – Instructor