Buy/Hold Account
The Buy and Hold Service Level
The “Buy and Hold” service level is a special class type – it allows for very long durations (up to 18 weeks), but with very few trades (20 maximum). Generally speaking, the “Buy and Hold” portfolio is used in conjunction with Silver, Gold, or Platinum service levels in many portfolio management and investment classes to encourage students to build two types of portfolios: one active and one passive.
Integrating A Passive Portfolio In Your Class
As the name implies, the “Buy and Hold” portfolio is meant to introduce students to the “Buy and Hold” family of investment strategies. With an 18 week duration, students are generally encouraged to build a portfolio of 5 to 10 holdings, and hold them for the duration of the semester. Their remaining trades allow for one or two portfolio re-balancing transactions over the course of the trading session.
This provides invaluable experience managing real portfolios for real clients – the “Buy and Hold” passive portfolios are great practice for acting as an investment adviser who provides guidance for clients every few weeks or months, but does not encourage active trading.
Active Versus Passive
By giving your students two different portfolios to manage – one “Buy and Hold” and one allowing more frequent trading, it helps cement the difference between “Active Trading” and “Passive Investing”.
These two types of portfolios require different types of attitudes while researching, buying, and managing over the course of the trading period, and essential skill building to allow differentiate which investments might belong in which portfolio but not the others.
Both during and at the end of the trading period, professors usually ask their students to provide “Status Reports” and rationale between the decisions of what was – and what was not – traded in each portfolio.
This allows students to build skills both with active trading (building options strategies, looking out for short-term trading opportunities, trading currencies and futures), while also requiring them to build a second stable portfolio with a specific long-term investment theme.
Adding A Buy And Hold Portfolio To Your Class
If you have not yet set up your classes for this semester, you can add a “Buy and Hold” portfolio right from the Class Creation page. The Buy and Hold account normally costs $12 per portfolio, but if it is being used in conjunction with a higher service level, we offer a 50% discount.
The “Buy and Hold” portfolio acts as a second class – it will appear separately for all of your administration reports, and your students will be able to switch between these portfolios from their “Dashboard”.
Recommended Projects Using Buy and Hold
Many professors around the world integrate a “Buy and Hold” portfolio with their classes – below you can see a few that have been shared with us. If you have your own class project you would like to share with our community of professors, please submit it here.
Portfolio Fund Management Project
By Kevin Bracker, Pittsburg State Univ
Trading Account:
One portfolio will be an active “trading” account. The goal of the first portfolio will be to accumulate the most wealth. Each person starts with 200 transactions. In your trading account you must establish a minimum of 3 options positions, 3 futures positions, 1 short sale (of a stock), and a minimum of 40 total transactions (note – no more than 1 futures position or option position can be established in the last week and count towards your minimum of 3.) You must have at least five weeks with at least 3 transactions for the week. You may trade stocks, options, futures, bonds, mutual funds, international stocks. A maximum of 25% of your equity can be placed in any one position. Only stocks with a price of $3.00 or higher can be traded. There is a flat commission of $10 per transaction
Mutual Fund Account:
The second portfolio is limited to 20 transactions and will be primarily buy-and-hold. For this portfolio, you must manage it with a specific objective in mind (similar to a mutual fund – an “approved” list of objectives is listed below). Your grade will be partially determined by how well your portfolio “fits” your objective. Please note that this is NOT a portfolio of mutual funds, but a portfolio of individual securities (stocks and/or bonds) managed to meet a specific objective. DO NOT PUT MUTUAL FUNDS IN YOUR MUTUAL FUND. Since you only have 20 trades in this account, be careful to make sure you know what you want to do before you start trading (and that you are using the correct account).
Click Here To Download The Full Project Description
Hedge Fund Management Project
By Matthew Carey, Hagen School of Business
Each student is to assume the role of hedge fund manager and to design and execute an appropriate strategy to maximize the portfolio’s return over the eleven (10) week investment horizon. The clients of the fund have specified capital appreciation as the main investment objective and have no short-term cash needs. Your challenge will be to design and execute an investment strategy that satisfies the client over the 10 week investment period. Your grade for this project is based on several factors as outlined on page three. Each student will be responsible for articulating the investment objective, formulating an appropriate investment strategy to meet the objectives, conducting the necessary research, selecting the appropriate securities, executing trades, tracking daily performance, and rebalancing the portfolio when necessary.
Investment teams will also be formed and a portion of your grade based on team performance. As a result, team meetings/collaborations and discussions are highly encouraged. These teams will also be assigned an additional project to report on certain economic indicators during the semester. More on this subject will be discussed in a later class.
In addition, the portfolio will be an “active” trading account as opposed to a “passive” trading account. Each student starts with 200 transactions (you may choose to buy additional trades). In your account you must establish a minimum of 40 trades.
- Each student will make a presentation of his/her objective/strategy. Feedback will be provided from the instructor as well as from team peers regarding the soundness and practicality of the strategy. These presentations will occur during the class on March 12.
- Trade-Log: Keep a record of the rationale for each trade decision that you make during the simulation.
- Collect articles that discuss the securities that you trade and provide relevant economic advice important to your portfolios success.
- Track the daily performance of your portfolio and your benchmark index (keep a log of the total value of your portfolio).
- Be sure to formalize (get approval) for any modifications you make to your portfolio’s objectives and/or strategy. Trades executed that do not conform or follow your investment objectives will not score favorably. If you decide you want to change your strategy, you must justify your decisions and obtain both instructor and team approval.
- MIDTERM and FINAL PRESENTATION: Each student will present a midterm overview as well as a final presentation of your portfolio performance (see course syllabus schedule).
Click Here To View The Full Project Description
Financial Derivatives Research Project
By Frank Conway, Waterford Institute of Technology
This research project accounts for 50% of the final mark. This will incorporate the use of StockTrak where you will ‘paper trade’ on a number of exchanges using a variety of derivatives and assets. You will set out targets for each trade, and interpret and evaluate the trading results in the context of the material read during the semester.
Students have 12 weeks to buy, sell, short, long and cover positions on trades made during this period.
Each trader has two accounts, each containing $1 million to trade. One account is known as the active account where you trade regularly, while the other account is known as the passive account.
To date the traders should use up all of the $1 million in the passive account on the purchase of stocks from a number of exchanges, as instructed. Traders will hold these stocks in their passive account for the duration of the trading period. Traders can adopt any approach in selecting these stocks.
The trades made in the Active account should reflect the material demonstrated and referred to in lectures, as well as those adopted by you having read outside the material, whether it is self-interest or adopted form from previous modules. Currently, the use of technical analysis will be discussed and, therefore, should be applied and reflected in the trades made.