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A Stock Portfolio Analysis

Essay by   •  April 2, 2013  •  Case Study  •  962 Words (4 Pages)  •  1,278 Views

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Being able to master the buying and selling of stocks can be difficult. Some are successful at it while others are not. The most important thing to understand about stocks is that they come with risk just like any other type of investment. As a result, you need to be careful when choosing stocks to buy and sell.

For my portfolio, the five stocks I chose were Coca Cola, GameStop, Google, McDonalds, and Proctor and Gamble. I had several different reasons for choosing these stocks. I chose Coca Cola, McDonalds, and Proctor and Gamble for their stability. Each is a large company and the demand for their products and services are generally stable. I chose GameStop because I have a good understanding of the business and its market. I know that most of their revenues come from the sale of new games and that most new games are released between October and January meaning that their stock should be up during these months. Finally, I chose Google to experiment with its stock. Google has one of the highest stock prices right now and I wanted to learn how high valued stocks behaved in the market.

Overall, my portfolio did quite well. In the end, my portfolio ended up with a total value of $103,316.97, which was $3,316.86 more than my starting value of $100,000.11. This is a 3.32% increase from the starting value. Separately, each of my stocks did well. This was a different compared to week two when each stock was selling below the value I purchased them. My best stock was GameStop, which improved in value by 15.54% at the end of the project. Overall, this stock netted me $1,535.50, which was the most from any of my stocks. My next best stock was Google, which netted me $1,404.00. Overall, these two stocks contributed to most of my final total. Otherwise, my other three stocks netted me less than $250 each. Even so, all three did well. My worst stock of these (Proctor and Gamble) still improved in value by 1.07%. This was a decent, if surprising result. I did not expect all of my stocks to improve over this time as they did.

Given the opportunity to create a new portfolio with what I know, most of the portfolio would change. Using what I already knew, I still would have chosen GameStop as one of my stocks. Otherwise, I would have applied what I have learned in class to choose the remaining stocks in the portfolio.

One aspect I would use in creating my portfolio would be beta coefficients or just simply betas. Betas are a good measure of a stock's volatility. Betas show the tendency of a stock to move up and down with the market (Brigham & Houston, 274). As a result, a stock with a low beta moves less than the market, and a stock with a high beta would move more than the market. However, stocks with a lower beta usually have smaller returns compared to those with higher betas. With that said, I would choose stocks with lower betas because I do not mind having lower returns in exchange



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