Introduction/Overview
For the class Stock-Trak simulation, I was given $1 million dollars to invest however I choose to. I made all trades on the week on February 5, 2018, and the report was conducted following the close of the market on April 27, 2018. After the near-three month simulation, my portfolio lost $3,509.83.
When choosing what to purchase, I made sure to diversify my portfolio. Diversifying is a risk-reducing strategy in which investments are spread out among various industries to ensure maximum return. I initially followed diversification advice from Fidelity, which suggests a diversified approach of 70% stocks, 25% bonds, and 5% short-term investments (CITE). I lowered the 70% in stocks to 50%, and investing the remaining quarter …show more content…
Morgan Stanley now predicts that CELG is 1-3 years away from introducing a new drug combatting Multiple Sclerosis, and will need to invest more money into testing the drug. This concern led to a massive selloff of CELG stocks at the end of the simulation.
I also earned some dividends throughout the simulation. A dividend is a distribution of a portion of the company’s earnings in a given period of time. My dividends totaled less than $1,000, and the lack of dividends is one issue with a shortened simulation. In a longer simulation or a long-term investment, dividends become more valuable as the money stays invested longer, and the dividends accumulate over time.
Bonds
Per the advice of several diversifying articles, I invested 25% of my portfolio into bonds. I took a risk, and invested it all into a high-yield bond, also known as a junk bond. There is risk that these bonds tend to lose value, as the companies handing out the bonds generally are desperate for cash. However, despite the loss of value in my bond, I earned back more through the interest in the …show more content…
By putting so much in one bond, I was risking losing a significant amount of money, but I did get lucky in earning a positive return.
Spots
I also chose to invest 16% of my portfolio in gold. I invested in gold because gold has traditionally been a surefire way to hedge against inflation, as gold has traditionally maintained it’s value. Throughout the simulation, the value of gold dropped, as the US dollar strengthened throughout the simulation. The reason for the dollar strengthening was the increase in jobs and US Treasury Yields peaking, because gold is not directly tied to paper investments, the value compared to the dollar dropped. If I were to run the simulation again, I would again invest the same percentage in gold.
Cash
To hedge against my hedge of gold, I saved 7% of my portfolio as cash. Investopedia provides three reasons for keeping cash in a portfolio, cash allows room for growth and opportunity, cash reduces the volatility of your portfolio, and is generally safe, and also that the bull-market is slowing down, emphasizing the importance of lowering
For the class Stock-Trak simulation, I was given $1 million dollars to invest however I choose to. I made all trades on the week on February 5, 2018, and the report was conducted following the close of the market on April 27, 2018. After the near-three month simulation, my portfolio lost $3,509.83.
When choosing what to purchase, I made sure to diversify my portfolio. Diversifying is a risk-reducing strategy in which investments are spread out among various industries to ensure maximum return. I initially followed diversification advice from Fidelity, which suggests a diversified approach of 70% stocks, 25% bonds, and 5% short-term investments (CITE). I lowered the 70% in stocks to 50%, and investing the remaining quarter …show more content…
Morgan Stanley now predicts that CELG is 1-3 years away from introducing a new drug combatting Multiple Sclerosis, and will need to invest more money into testing the drug. This concern led to a massive selloff of CELG stocks at the end of the simulation.
I also earned some dividends throughout the simulation. A dividend is a distribution of a portion of the company’s earnings in a given period of time. My dividends totaled less than $1,000, and the lack of dividends is one issue with a shortened simulation. In a longer simulation or a long-term investment, dividends become more valuable as the money stays invested longer, and the dividends accumulate over time.
Bonds
Per the advice of several diversifying articles, I invested 25% of my portfolio into bonds. I took a risk, and invested it all into a high-yield bond, also known as a junk bond. There is risk that these bonds tend to lose value, as the companies handing out the bonds generally are desperate for cash. However, despite the loss of value in my bond, I earned back more through the interest in the …show more content…
By putting so much in one bond, I was risking losing a significant amount of money, but I did get lucky in earning a positive return.
Spots
I also chose to invest 16% of my portfolio in gold. I invested in gold because gold has traditionally been a surefire way to hedge against inflation, as gold has traditionally maintained it’s value. Throughout the simulation, the value of gold dropped, as the US dollar strengthened throughout the simulation. The reason for the dollar strengthening was the increase in jobs and US Treasury Yields peaking, because gold is not directly tied to paper investments, the value compared to the dollar dropped. If I were to run the simulation again, I would again invest the same percentage in gold.
Cash
To hedge against my hedge of gold, I saved 7% of my portfolio as cash. Investopedia provides three reasons for keeping cash in a portfolio, cash allows room for growth and opportunity, cash reduces the volatility of your portfolio, and is generally safe, and also that the bull-market is slowing down, emphasizing the importance of lowering