Stock Track Report
Objective/strategy/investment style
Over time our strategy changed as our portfolio returns changed. We first employed a diversified strategy of going of news articles, however we soon realized that the news affecting the stock would already be factored into the price.
We then shifted toward an insider buying strategy where we looked for key executives in companies who exercised stock options and tried to examine why they did so. We looked to see if executives were cashing out and getting ready for retirement or the company was investing heavily in R&D. Once we made these investments, we took a passive strategy to let the stock prices work themselves and didn’t want to overreact to dips in price. We tried to give time to the investments to rebound, but they never did and we eventually had to liquidate our losses so we could start fresh.
After both of those strategies failed, we then tried to widen our margin for error and select general indexes so that we could invest in industries that generally trended upward; the motivation behind this was to provide a solid base that we could rely on in case our risky investments didn’t work. We then shifted our focus to risky investments to make up for our losses. In a sense we took on calculated gambles. We focused on 1st identifying stocks that had earning reports due. Then we selected the stocks based on a blend of fundamental and technical analysis to select the stocks we felt were good buys.
Greatest Success
The greatest successes of the portfolio are with the ETFs. After the announcement of Trump being elected, the market actually improved instead of declining like I thought it would have. After a discussion with a professor, they mentioned Trump’s plans to spend money on infrastructure while decreasing taxes, I hypothesized people will continue to overreact to that news, therefore the market will continue to increase for now. I then began research into mutual funds and ETFs that captured the overall index of the market. I knew since it was late in the game already, I had to go with risky investments to make up for the losses I had. I also knew we haven’t done well in picking individual securities, so we would go for a broader and overall strategy than specific ones. We decided to go with the TNA, SPXL, and FAS ETFs because they take advantage of a bullish market by amplifying returns through debt and derivatives; they also usually provided returns faster than individual stocks.
The greatest success is in the TNA ETF as it provides return in a bull market on small cap stocks. As we know from class, small caps stock are more volatile but provide better returns. We bought 500 shares at $74.62 and now they are trading around $97.68.
Worst Mistake