("Stock Portfolio," 2011)
What stocks performed the best and worst?

The stocks that performed the best include: EFX, MCD, AAPL, SUX, PETM and GMRN. The positions that were underperforming the others include: MSFT, AXP, TIF and JPM.

Stocks for given portfolio were selected randomly what would you've done differently?

There would have been a focus on having firms that pay higher dividends and growth. This is when the total returns in the portfolio will be higher in comparison with other strategies.

What factors and why are they important when choosing stocks?

The factors that are most important when choosing stock are the earnings and dividends. The two elements will help everyone to quickly see the underlying strength of the company in comparison with other firms.

An Examination of the Companies in the Portfolio

The different companies that were selected as a part of the portfolio strategy are involving diversification across numerous sectors. To include: financial services (i.e…...

This helps managers to make informed decisions about possible reactions based upon systematic events. (Estrada, 2002)
Moreover, Brown (2010) determined that different approaches must be utilized under the CAPM model to account for risk. This is because the markets are constantly shifting and new events will take place which change the thinking of economists, analysts, fund managers and investors. To stay on top of what is happening, requires utilizing contrasting forms of investigation during the process. These insights are showing how different forms of regression analysis must be utilized to fully understand what is taking place. (Brown, 2010)

As a result, the CAPM approach can provide a good background about what is happening in the markets and effectively accounting for risks. However, there are times when different forms of analysis must be utilized. The best way to achieve for these objectives is use other areas which can be augmented under the…...

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References

Adcock, C. (2010). Asset Pricing and Portfolio Selection. Annual Operations Results, 176, 221 -- 234.

Brown, S. (2010). Interemporal Equilibrium Models. Quantitative Finance and Risk Management, 15, 283 -- 287.

Chang, M. (2011). Reexamination of Capital Asset Pricing Model. African Journal of Business Management, 5 (33), 1284 -- 1290.

Fogelstrom, N. (2010). Using Portfolio Theory to Support Requirement, Software Product Management, 11, 49 -- 52.

Using a Technical analysis is equally ineffective since this analysis would not necessarily focus on the financial statements of the company, but rely on trends in the economy, price trends and overall market tendencies to predict where a particular type of stock will go. While this strategy is risk aversive in general, the point becomes moot again as the overarching quality of all stock in this economy rise and fall together.
In Market B. however, the overall diversification of stock returns makes the possibility of creating a better risk averse portfolio much more likely. Both techniques of investing previously discussed work extremely well in this economy for both high risk and low risk strategies. Using a fundamental analysis one can make more valid assumptions about the future of a company from its financial statement. While any company health is certainly partially regulated by economic trends, in Market B. there is…...

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References

Lopus, J.S. (2005). The Stock Market Crashes of 1929 and 1987: Linking History and Personal Finance Education. Social Education, 69(2), 70-81

McMenamin, J. (1999). Financial Management: An Introduction. London: Routledge.

Because of this, I would expect that U.S. Energy would have performed better, but that has not been the case. None of the individual holdings are overly dependent upon energy costs, such as we would see in the airline industry, so the performance of the portfolio does not seem to have been overly affected by the rise in energy prices.
The proper approach to investing involves diversifying, not only across different companies, but also across different sectors of the economy. In a given year, one sector of the economy will be up and another will be down. One-year large cap growth stocks will be up and foreign stocks will be down. The next year real estate will be up and large cap growth may be down. If we knew in advance which sectors would be on top, investing would be easy, but we don't. As a result, diversification across different…...

Investments
Investment returns are the amount that the investment is worth (upon sale), net of taxes, over and above the price paid for the investment. The returns can be expressed either in absolute terms, or in annualized terms. The return on an investment that cost $1,000 and is sold for $1,060 a year later is as follows:

Open

Close

eturn

% eturn

This graph shows that the odds of an outcome increase as the expected return approaches 6%. If there were an infinite number of scenarios, the graph would look like this, but the tails on the y axis would by fully extended infinitely as the probability of an outcome approaches zero.

The expected rate of return on the Treasury bonds is the weighted average of the probabilities and returns listed in the table. Thus:

Probability

eturn

W.Avg

-14

-1.4

-4

-0.8

Expected eturn

The expected return therefore is 6% on the Treasury bond.

d. Stand-alone risk reflects the risk associated with a single asset. In the…...

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References

Investopedia (2015). CFA level 1. Investopedia. Retrieved August 5, 2015 from  http://www.investopedia.com/exam-guide/cfa-level-1/securities-markets/weak-semistrong-strong-emh-efficient-market-hypothesis.asp 

Investopedia (2015). Standalone risk. Investopedia Retrieved August 5, 2015 from  http://www.investopedia.com/terms/s/standalone_risk.asp

As a result, we received an execution price of $65.08.
First Energy was chosen, because it can provide the portfolio with stability. As, the company is focused primarily on: the distribution and production of electricity. These two elements are important, because this resource is always in demand regardless of shifts that are occurring in the economy. I selected this stock, because it can provide the portfolio with earnings stability and consistent dividends. During times when the markets are becoming very volatile, this will ensure that the value remains steady.

Time Warner was chosen due to the fact that: they own a large cable operation and they can benefit from the shifts to digital cable. This will ensure that the company is able to take advantage of the changes in how consumers want to be entertained. As, they are: demanding more services at home and they want them to be bundled together.…...

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Bibliography

Wang 93's Portfolio, 2011. Print.

Wang 93's Portfolio NYX, 2011. Print

MLA Format.  http://owl.english.purdue.edu/owl/resource/747/01/

It is expected that the bond will mirror the performance of the S & P. 500. ("Transaction History," 2010)
November 24, 2010

On November 24th several more new purchases would take place to include: General Motors, erkshire Hathaway, the Fidelity Immediate Government Fund and the Strategic Advisors Income Fund.

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)

erkshire 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…...

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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/

That being said, the overall risks to the portfolio will vary, depending upon the type of stock that is purchased and how much diversification is being utilized. ("What are the Main Types of Stock.," 2010)
How much does a stock contribute to the return of a portfolio?

Historically the average return of the S&P 500 has been 9.8% a year. (Swedroe, 2009) However, the overall impact of the return will depend upon: the underlying amounts of growth and dividends that are received. These two factors are important, because they can cause the total return of the portfolio to vary. As a result, the overall contribution of stocks, on the return of the portfolio; will depend upon the type of equity securities that are being purchased and the holding period.

Clearly, the underlying amounts of risks and rewards will depend upon a number of different factors. As far as risks are concerned, the…...

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Bibliography

Diversification. (2010). Invest Words. Retrieved from:  http://www.investorwords.com/1504/diversification.html 

How Far Have We Fallen. (2009). Ritholz. Retrieved from:  http://www.ritholtz.com/blog/2009/02/bear-market-comparisons-1929-2009/ 

What are the Main Types of Stock. (2010). MSN Money. Retrieved from:  http://moneycentral.msn.com/quickref/quickref.asp?Cat=10&SelCat=3&RefType=0&QAMode=2&Topic=7&Sub=9 

Swedroe, L. (2010). Are Stocks a Good Buy. Money Watch. Retrieved from:  http://moneywatch.bnet.com/investing/blog/wise-investing/are-stocks-a-good-buy/1465/

Stocks have fluctuated in exactly the same way. The Home Depot went up 1.46% during the first week, while Lowe's managed to go even further: 1.74%. The situation was quite the same during the second week: 1.41 for the Home Depot, and 1.11% for Lowe. The upward trend was maintained for three weeks, but the growth ratio was only 0.5-0.57. The fourth week was not so good for the two companies. Stocks went down 0.6% and 0.86%, respectively. The fifth week was not better, as the downward trend continued, but the percentage change was not that significant: 0.5%-0.6%. The stocks are currently at higher levels: $41.06 for Home Depot and $65.22 for Lowe's. Morningstar analysts estimate the fair value of the two stocks at $44 and $62 respectively.
eferences

1. Morningstar Analyst report on the Home Depot www.morningstar.com

2. Morningstar Analyst report on Lowe's www.morningstar.com

3. Information on the business of Home Depot…...

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References

1. Morningstar Analyst report on the Home Depot www.morningstar.com

2. Morningstar Analyst report on Lowe's www.morningstar.com

3. Information on the business of Home Depot  http://www.homedepot.com/HDUS/EN_US/corporate/about/about.shtml 

4. Press article http://www.retailnet.com/story.cfm?ID=23316

("Gates, Bill," 2007) the company is in fact considered a regional financial backbone, in the Seattle-edmond area where its world headquarters are. The whole region and to some extent the whole world takes notice when Microsoft announces financial strategies and changes or when stocks rise or fall.
The software maker said it would buy back $20 billion through a tender offer set to be completed on Aug. 17. The company said that its board of directors has also authorized the company to buy back up to $20 billion worth of stock through June 2011. The company said it has completed the $30 billion stock buyback announced two years ago. "With our share repurchase programs announcement today, we reaffirm our confidence and optimism in the long-term future of the company and continue to execute on our strategy of returning capital to shareholders," Microsoft Chief Financial Officer Chris Liddell said in a…...

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References

Bolten, S.E. (2000). Stock Market Cycles: A Practical Explanation. Westport, CT: Quorum Books. Retrieved August 29, 2009, from Questia database:  http://www.questia.com/PM.qst?a=o&d=29180460 

Fried, I. (July 20, 2006) Microsoft plans massive stock buyback, CNET News

 http://news.cnet.com/Microsoft-plans-massive-stock-buyback/2100-1014_3-6096631.html 

Gates, Bill. (2007). In the Columbia Encyclopedia (6th ed.). New York: Columbia University Press. Retrieved August 29, 2009, from Questia database:  http://www.questia.com/PM.qst?a=o&d=112860479

Theory (MPT) and its role in asset allocation and diversification. The paper reviews arguments in favor of and against MPT, in addition to reviewing how MPT affects portfolio management.
MPT describes a theory on how risk-averse investors can build portfolios that optimize or maximize expected return based on a given level of market risk, while emphasizing that risk is an inherent factor of higher reward. MPT posits that it is possible to construct an "efficient frontier" of optimal portfolios that offer the maximum possible expected return for a given level of risk (Modern portfolio theory, 2011).

Modern Portfolio Theory

Typically, an investor looking for the ideal investment, would choose one whose attributes included high returns coupled with low risk. The ideal investment probably does not exist, but the search for it has caused financial managers and investment analysts to spend time to develop methods and strategies, many of which are based on…...

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Reference List

Bernstein, W.J. (1996). The expected return of precious metals equity. Retrieved May 31, 2011 from  http://www.efficientfrontier.com/ef/197/preci197.htm 

McClure, B. (2011). Modern portfolio theory: why it's still hip. Investopedia Web site. Retrieved May 31, 2011 from  http://www.investopedia.com/articles/06/MPT.asp 

Modern portfolio theory: Dynamic diversification for today's investor. Vision Financial Markets. Retrieved May 31, 2011 from  http://www.usafutures.com/modernportfoliotheoryinvesting.pdf 

Modern portfolio theory -- MPT. (2011). Investopedia Web site. Retrieved May 31, 2011 from  http://www.investopedia.com/terms/m/modernportfoliotheory.asp

financial assets in order to recommend the appropriate investment vehicle for the client. Analysis of different investment vehicles shows that ETFs are the best investment option for our clients. The ETFs are the basket of securities that combine stocks, bonds, cash, commodities and other securities. The report diversifies our investment options choosing the stocks, bonds and cash from different industries. Based on the historical data, our average annual returns are 38% revealing EU 32,997 as our annual returns from our initial investment capital of EU 100,000. After 3 years, the net worth of our investor will be EU 457,901, which include the cumulative returns and the capital. However, the net worth of our investor will be EU 5.38 Million after 10 years. The report also carries out the sensitive analysis on the investment option assuming that our investment choice is affected by the macroeconomic forces. The report reduces our…...

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References

Costa, D. (2011). The Portable Private Banker Investing Efficiently through Mutual Funds and ETFs. UK. CreateSpace Independent Publishing Platform.

Costa, D. (2011). The Triumph of Intelligence. UK. CreateSpace Independent Publishing Platform.

David White & Associates (2011).The Benefits of Diversification. USA.

Justice, P. (2013). ETF Investor Recommendations for commonsense ETF investing. Morningstar Investment Report .

Strategy
Over the last several years, the markets have faced a tremendous amount of volatility. Part of the reason for this, is because the global financial crisis and subsequent recession caused the Dow Jones Industrial Average to decline to 6,547. Then, it would climb over 68% to cross above 12,000. This is important, because it is showing how there are tremendous opportunities for investors. However, in order to attain above average returns requires that you are using a strategy that is: embracing growth and minimizing risks as much as possible. To achieve this objective requires having: an asset allocation strategy that will incorporate balance and value. Once this takes place, it will provide the greatest insights as to how we should structure a portfolio that will maximize the total return investors are receiving in the year ahead.

The Portfolio Philosophy

The basic strategy that we will be using is to purchase those…...

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Bibliography

The China Fund. (2011). Yahoo Finance. Retrieved from:  http://finance.yahoo.com/q/ks?s=CHN+Key+Statistics 

Fidelity U.S. Treasury Money Market Fund. (2011). Fidelity. Retrieved from:  http://fundresearch.fidelity.com/mutual-funds/summary/31617H300 

Sander, P. (2011). The 100 Best Stocks. Adams, MA: Avon Media.

Standard and Poor's. (2010). Standard and Poor's 500 Guide. New York, NY: McGraw Hill.

Investment Strategy
When the market crashes, turns bearish, or severely corrects, investors not only lose objective things such as money, they also lose the sustaining functions of which the investing process (and/or money, which may psychologically represent self-esteem, independence, power, etc.) has been the source. That means, in addition to objectively not having the money to buy that new house or car, self-esteem drops, and the investors capacity to calm themselves down is diminished, motivation wanes, confidence is shaken, and vitality ebbs. A down market represents an injury to our total sense of self and all the functions that sustain it. In a general way it represents a hope or fantasy lost.

For the young investor, with a large amount of earning power remaining in his life, the ups and downs of the market are small obstacles to the long-term objective of amassing a financial nest egg on which to retire. However,…...

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References

Block Sandra. Stable value funds low-cost, reliable investments., USA Today, 11-30-1998, pp 20A.

McEwen David, Best to find out your risk tolerance., The Daily News (Taranaki, New Zealand), 10-08-2001, pp 6.

Luke, Robert. Staff, Step 1: Investors should evaluate tolerance for risk Finance professor's quiz helps determine the asset allocation each individual is most comfortable with.., The Atlanta Journal and Constitution, 04-03-2000, pp S26.

Diversification
Portfolio diversification as a form of risk management is one of the cornerstones of modern investment theory. According to the theory, the ideally-diversified portfolio is 'deeply diversified' within each asset class and also 'broadly diversified' across all the asset classes within the portfolio (Simon 2010:2). Asset classes consist of "stocks, bonds, real estate, commodities, precious metals and collectibles;" forms of market capitalization (micro-, small-, mid- and large-cap); style; sectors; industry types; and geography (Portfolio diversification, 2012, Investing in mutual funds). The objective of diversification is that "risk has virtually been eliminated within each class" by combining lower and higher-risk assets (Portfolio diversification, 2012, Investing in mutual funds). Theoretically, the perfectly diversified portfolio should incur no additional risks to the investor greater than what is posed by the general market conditions. There is always risk in investment, but portfolio management is designed to minimize the risk.

To achieve this objective, modern…...

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Bibliography

Buffet, Warren. 1965. Letter to partners. Value Investing World. Accessed:

  [17 Aug 2012]http://www.valueinvestingworld.com/2007/08/warren-buffett-on-diversification-1966.html 

Calmar ratio definition. 2012. Investopedia. Accessed:

  [17 Aug 2012]http://www.investopedia.com/terms/c/calmarratio.asp#axzz23nrArUdJ