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Stock Track Analysis Over The Research Paper

Stocks

General Motors was selected, because it could help to provide the portfolio with above average growth. The results were that that stock would see an increase of 1.4%. ("Transaction History," 2010)

Berkshire Hathaway was purchased to provide the portfolio with stability and diversification. This investment is expected to outperform the major market averages. The results were up .96%.( "Transaction History," 2010)

Mutual Funds

The Fidelity Intermediate Government Fund was selected because of their focus on medium term Treasury investments. This is expected to underperform the market averages. The results were that the position declined by 2.55%. ("Transaction History," 2010)

The Strategic Advisors Income Fund was selected to provide the portfolio with additional income investments (as the fund invests in emerging market debt). This is expected to underperform the major market averages. The results were that the fund would decline by 1.30%. ("Transaction History," 2010)

Summary Analysis

Overall, the S&P 500 has been performing relatively strong. Part of the reason for this is because of favorable earnings and economic numbers (indicating continued economic strength). As a result, this has been having positive effects on the stock market by helping to push the S&P 500 to increase by 8.04% in just ten weeks. This is stronger than our portfolio. One of the main reasons is because cost averaging that occurred in numerous areas. At the same time, the purchase of a number of different long-term stocks is highlighting, how the strategy that is being utilized is focused on delivering consistent returns in the future. This means that the portfolio will underperform the markets, as all of the different positions were purchased within a few weeks of each other. That being said, the investments that were made into common stocks and mutual funds were the strongest performers in the strategy. This is because, they were more focused on the some of the strongest performing sectors in the economy.

In many ways, one could argue that this is what makes the portfolio a success over the short-term. As the different positions were able to provide balance and help to provide the various asset classes, with time to begin to see some early appreciation. However the most obvious weakness of the strategy...

As the different bond investments, could be diversified across various Treasuries and CD's through a process known as laddering. This is when you are taking the different maturities and are purchasing them over a given length of time to increase the overall return. At the same time, some kind of strategy must take into account for possible risks that could occur from sudden changes to the economy. As a shift in the long-term trend could cause the shares of some of the strongest names to go into a freefall. This is problematic, because it could cause many of the different common stock to face long periods of consistent declines. One possible way to mitigate this risk is to use a sell stop. This is a sell order that is set in advance and can be adjusted upward when the price of the stock increases. During times when the markets are becoming more volatile, this could be used to limit the overall losses. This is important, because understanding the successes and possible weaknesses of the strategy will help to increase the overall returns, while reducing risks. When you step back and analyze the overall portfolio strategy, it can help to provide consistent long-term growth and will outperform the market averages. The reason why the portfolio has not performed as well the market averages is because of the recent trades that were recently booked. This increases the transaction cost and reduce returns (over the short-term). However, as these positions begin to trade back and forth (over many years) is when the portfolio will be able to continually outperform the major market averages.
Bibliography

Account Details. (2010). Stock Trak. Retrieved from: http://www.stocktrak.com/private/account/summary.aspx

Ford Posts 68% Rise in Third Quarter Income. (2010). MSNBC. Retrieved from: http://www.msnbc.msn.com/id/39845528/ns/business-autos/

Transaction History. (2010). Stock Trak. Retrieved from: http://www.stocktrak.com/private/account/transactionhistory.aspx

Kavilanliz, P. (2010). Black Friday. CNN Money. Retrieved from: http://money.cnn.com/2010/11/27/news/economy/Black_friday_2010_sales/

Zomburn, J. (2010). Fed Says U.S. Economy Gains Strength. Business Week. Retrieved from: http://www.businessweek.com/news/2010-12-01/fed-says-u-s-economy-gains-strength-in-most-regions.html

Sources used in this document:
Bibliography

Account Details. (2010). Stock Trak. Retrieved from: http://www.stocktrak.com/private/account/summary.aspx

Ford Posts 68% Rise in Third Quarter Income. (2010). MSNBC. Retrieved from: http://www.msnbc.msn.com/id/39845528/ns/business-autos/

Transaction History. (2010). Stock Trak. Retrieved from: http://www.stocktrak.com/private/account/transactionhistory.aspx

Kavilanliz, P. (2010). Black Friday. CNN Money. Retrieved from: http://money.cnn.com/2010/11/27/news/economy/Black_friday_2010_sales/
Zomburn, J. (2010). Fed Says U.S. Economy Gains Strength. Business Week. Retrieved from: http://www.businessweek.com/news/2010-12-01/fed-says-u-s-economy-gains-strength-in-most-regions.html
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