Alex Sharpe Client Letter Essay

2a. Estimate the mean return and standard deviation for a portfolio consisting of one asset (N=1). This amounts to calculating the mean return and standard deviation of each of the eight country indexes, and take the averages. 2b. Estimate the mean return and standard deviation for portfolios with N=2. To simplify, calculate the expected return and standard deviation of the 7 equal-weighted portfolios consisting of the US and one other country.1 Take the averages. 2c. Estimate the mean return and standard deviation for portfolios with N=3. To simplify, calculate the expected return and standard deviation of the 6 equal-weighted portfolios consisting of US,

Answer: The standard deviation can be calculated by subtracting the expected return from the actual return for each year and squaring the results. The squares are summed, and divided by the number of observances minus 1. The square root of that result is the standard deviation.

Asset Allocation: Your allocation is approximately 86% stocks, 10% bonds, 3% cash & 1% other from the portion I analyzed. Of the stocks 71% are US & 15% foreign. As far as cap weightings, your portfolio is weighted more towards small cap stocks versus large caps by approximately 10% when compared to total US Stock market averages.

A. Javier’s current 401(k) plan’s asset allocation does not satisfy his desire for his overall allocation. Javier has a larger percentage of his portfolio invested in Bonds. His desired overall allocation is 35% bonds and 65% stocks.

Estimate and compare the returns and variability (i.e. annual standard deviation over the past five years) of Reynolds and Hasbro with that of the S&P 500 Index. Which stock appears to be riskiest?

Given my current affinity for investing and that it is my current aspiration I am ecstatic at every opportunity to hone my skills. I will accomplish this through establishing a connection with each of the groups Wharton Investing and Trading Group, Wharton Undergraduate Consulting Club, PCI Venture Club, Ivy Capital Management, InSITE Philadelphia,

The table below shows some statistics computed from monthly returns of Zeus equity funds, S&P 500 Index, and Lipper Growth Index during the given period.

mix of assets? What benchmark return might they expect for their current level of risk?

When combined with portfolio, we see the variance has changed. Reynolds, which was more risky with higher variance individually, when combined with portfolio, has a lower variance than Hasbro.

Imagine that you are a financial manager researching investments for your client that align with its investment goals. Use the Internet or the Strayer Library to research any U.S. publicly traded company that you may consider as an investment opportunity for your client. (Note: Please ensure that you are able to find enough information about this company in order to complete this assignment. You will create an appendix, in which you will insert related information.)

Deciding to invest is a decision that should not be taken lightly. Investing can make or break you financially depending on how you play the cards you are dealt. The purpose of this paper is to provide a rationale for the U.S. publicly traded company

We believe that our portfolio will maximize our returns while assuming a relatively low risk. Although stocks are extremely risky, we will diversify our stocks and will limit buying and selling. Rather than constantly trading stocks in order to seek a high return, our strategy as a passive investor is to purchase stocks we believe will increase while they are trading at low prices and hold on to them for a significant period of time. Some stocks that may be beneficial to our portfolio include Palo Alto Networks Inc. (PANW), and Mastercard Incorporated (MA), Intel Corporation (INTC). By implementing this strategy, we are optimistic that our portfolio will grow at a steady rate over time. While we find investing in stocks appealing, we have also made the decision to invest in mutual funds because it offers diversification, is professionally managed, aligns with our passive investing style, and have the potential to yield high returns. For example, one mutual fund that may add value to our portfolio include First Eagle Global Fund (SGENX) whose top holdings include Oracle, Comcast, and Microsoft. As stocks and mutual funds bring a significant amount of risk, adding bonds to our investment will allow us to earn a return with a low risk. While our portfolio is primarily focused on stocks and mutual funds, allowing 15% of our portfolio to consist of bonds will provide us with a safe investment.

−32 −4 10 38 28 75 24 Average and Standard Deviations for Stand-Alone Investments    Use formulas shown previously (tedious) or use Excel (easy) What is Blandy’s stand-alone risk?

The portfolio represents the passive strategy, which ended up being very successful. Passive investing, invests in accordance that does not entail any forecasting and disregards short-term fluctuations. The philosophy was to “hold” onto the stocks because of the belief in the weak-form of the efficient market hypothesis. The reasoning for the selections is, the market is efficient, and reflects all the information in the market, and that technical analysis such as past price movements can not be used to predict the future price. Also, by selling when the stock is “failing” is not beneficial because the stock would fall short. The rationale for selecting these three stocks was based on the type of industry they were in.

Your current portfolio holdings have an average pre-tax return of 3.23% 3-months average, 10.9% 1-year average, and 7.6% 5-years average. Standard deviation is considered a standard risk measure to the portfolio and measures the volatility of your returns. The 3-year historical standard deviation of your portfolio is 8.15%, higher risk than our 6.65% benchmark.