Personal Finance
STOCK ADVENTURE PROJECT
TABLE OF CONTENTS:
The following list shows the original prices, type and amount of each share purchased at the beginning of the semester.
The current value of my portfolio is now $101,183.98.
The return on my portfolio would be the current value, minus the original value (101,183.98-100,000) which is equal to $1183.98.
Walmart stock over the course of the semester not only maintained a positive gain while other stocks suffered loss, but also remained within a $1000-$7000 profit margin. Recent news also shows that Wal-Mart has had trades of more than 20 times the earnings of food producers such as Del-Monte. Other recent articles from Yahoo Finance give consumers reasons why shopping from deep discounters such as Sam’s Club can be beneficial. Buying in bulk from these retailers save consumers money and time by providing a one stop source for a range of needs, such as products that can benefit a local bar-b-q, to a do it your self wedding. Recent news also show that Wal-Mart has teamed up with Japanese Grocery Chain Seiyo. This new partial ownership and full partnership by Wal-Mart, has cut the foreign food chains profit losses from a net loss of 47 billion yen posted a year ago, to 4.7 billion yen ($43 million) to date. Seiyu operates 403 stores nationwide, and still forecasts projected profits to be $4.6 million in December. Wal-Mart is gradually introducing computer systems linking store inventory with suppliers at Seiyu stores. It is also trying to reduce prices through its global suppliers. It also opened its first supercenter, a warehouse-size store, in Japan this month. The article states that Wal-Mart is clearly gaining a foothold in the Worlds second largest economy.
I expected my portfolio do better than it did. Out of the stocks that I purchased, only two showed consistent gain over the semester, Walmart and Home Depot. Even then, Home Depot only averaged a mere $200 gain, making Walmart stock the only real money producing stock I owned. MSFT, TWX and SIL showed absolutely no gains, and even Microsoft Co. which I thought would be a big producer, quickly showed a decline of profits after the first 2 weeks, and continued to decline until the stock incurred losses up to $2400 at the end of the semester. I believe my portfolio did worse than expected because I placed my investments in communications and technology that face large competition from other firms on a daily basis. Also, investments in mineral and precious metal stock such as the silver mine stock (SIL), can be volatile stock that can easily go for long periods of time without profits, and that also easily fluctuates with the changing world market.
Over the course of this semester, the S&P 500 index, DJIA and Nasdaq indexes have stayed along the same path in earnings. After several sharp upward and downward fluctuations between the months of January and April, the market currently has leveled off, and is slightly below what it had been at in the beginning of January.
I believe my portfolio has done better than the general market. The market is now slightly below what it had been in January, yet my earnings at the end of April were twice the earnings than at the beginning of the semester.
Stock that had performed poorly were MSFT, TWX and SIL, which showed no gains. Microsoft Co. performed the worst and showed losses of up to $2400. Current articles show that there as been increasing pressure and competition among firms in the software industry. In addition, the markets overall sluggish growth has forced business software makers to give deep discounts of up to 30%. CEO Henning Kagermann of a German based software company SAP stated that "The pricing environment has not changed. It is as tough as it was, and it will not be much better, but it is OK." When he was asked when pricing pressure will improve, Kagermann said, "Might be never...I think this is part of our daily life." Not only national, but also international competition between major software firms have caused firms to lose profit. In addition, the reluctance of companies to splurge on large software contracts have driven average deal sizes lower. The ongoing take over battles between US based companies such as Oracle Corp. and PeopleSoft Inc., have caused customers to choose foreign software companies instead. In fact, the German based SAP Co. has claimed a 54 percent market share among a handful of top business software makers including Microsoft Corp. It is for these reasons that I believe Microsoft stock is currently doing poorly.
8. Based on this investing experience, what have you learned?
I have learned that it is important to survey the market for current events that influence stock conditions, and to compare my potential stock investments to other firms in the same markets before investing in a stock. It is also important to monitor the progress of your portfolio and overall market growth while stock is being held. Investing in new companies are a more risky investment that larger, more established firms, but yield larger returns when market conditions are right. Investing in mutual funds, however, are less likely to suffer loss because of its diversification but usually yield lower returns. In the future I would invest the major portion of my money in a mutual fund and use the remaining portion to experiment with, to invest in growth stock.
9. If you had a total of $10,000 to invest today, would you invest in individual stocks or a mutual fund? Why?
I would invest in a mutual fund because the diversification of stocks usually means that my investment is less likely to be subject to the fluctuating market. By investing in several stocks that I had to believe to be stable firms at the beginning of the semester, I had essentially done the same thing as a mutual fund company would have done for me.
10. If you had to pick one stock that you believe will perform well in the future, which would it be? Explain why you believe the stock will perform well.
If I could pick one stock that would perform well in the future, it would be Walmart stock. Walmart is an established company that has thousands of stores throughout North America and overseas. Any industry that services the basic needs of individuals, such as the need for clothing, housing, medical care or food, is always needed and will be more secure than other industries. Firms such as Walmart that meet several of these basic needs at a centralized location make it convenient for consumers to purchase goods from them. It is for this reason that I believe that Walmart sock has showed consistent increasing profits over the semester.
JANUARY 16
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JANUARY 23
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JANUARY 30
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FEBRUARY 6
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FEBRUARY 13
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FEBRUARY 20
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FEBRUARY 27
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MARCH 5
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MARCH 12
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MARCH 19
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MARCH 26
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APRIL 2
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APRIL 9
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APRIL 16
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APRIL 23
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APRIL 30
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