Finance 367 Stock Trak Paper

3169 WordsJan 16, 201113 Pages
Stock-Trak Portfolio Analysis Portfolio management is a tactic used by not only those in the financial sector of the business world, but also by individual’s managing their own personal finances. Therefore, it important to develop and implement investment strategies in order to gain the most on a portfolio – be it as a mutual fund manager or an individual planning for retirement. Tools such as Stock-Trak, an online portfolio simulation, allow students to gain hands on experience testing different investment strategies in a risk-free, yet realistic environment. From February 1 to April 30, 2010 I took part in one such simulation by managing an online Stock-Trak portfolio. After being given $1,000,000 with which to invest, all monetary…show more content…
I chose this search as it revealed under-valued stocks. Over the course of the simulation, I hoped that the market would realize the intrinsic value of the stocks and thus the market price would rise accordingly. Hence, I wanted to take advantage of the mispricing by capitalizing on the arbitrage. Unfortunately, I did not take into account the fundamental risk of such investments. As the simulation was only a few months long, it was irrational of me to believe that the market would respond in such a short time period to so many stocks. Some of the reports which I was basing my investment decisions on were over six months old; hence the likelihood of the market adjusting to the fair value of the investment within the two months remaining in the simulation was unlikely. Had I realized this at the time, I would not have allowed bargain stocks to take up such a large percentage of my portfolio. APOL, a value stock, resulted in the third highest loss among all my investments with a loss of 3.3% of $980. In the end, most of the “bargain” stocks which I purchased resulted in losses and many of the others, such as SVU, I sold shortly after purchasing to prevent future losses. Another stock screen I used was “Warren Buffet Stocks” because it focused on stocks with strong competitive advantages – i.e. the companies had positive free cash flows and historically high returns – because I wanted to invest in resilient companies as the economic state of

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