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Investment - Essay Example
The purpose of this project was to simulate stock market investment trading and facilitate decisions with a comfortable budget and enough time during a term to be flexible. The Wall Street Journal MarketWatch site offered just such a simulation portfolio and online gaming…
The paper tells that during the gaming period in question, Apple and eBay did in fact record the best capital gains of 1.6% and 1.3%, respectively. Apple was once again on a roll this week.
It approves that Apple is a long-term hold, beloved of institutional buyers and pension fund managers. The closing price of $560.68 when the simulation game ended on Friday, Dec. 6, corresponded to a market cap of $503.871 billion. This despite founder Steve Jobs having passed away in late 2011, two years now, and no seriously new breakthrough products in the same timespan.
According to the paper at the end of week, loading the portfolio with SPY. GE, eBay and Cimarex turned out to be too conservative and defensive a strategy. In retrospect, SPY was too cautious in approximating the performance of the S&P 500. Though ETF’s have much lower expense ratios, no investment minimums, are taxed less and grant option and short-selling opportunities, the lesson learned is that minimizing risk with diversification works but rewards the patient investor over a long bull market. On the other hand, AAPL contributed tremendously to portfolio gains because management was clearly bent on continuing its 18-month run of unleashing quarterly dividends as never before in the last ten years. The object lesson: the intrinsic value of a market leader that has had a two-generation love affair with its upscale markets beats ETF’s and industrials when market sentiment is mixed, as it has been since mid-2007, the start of the Great Recession. ...