StockTrak Investment Strategy - Essay Example

Portfolio Investment In undertaking an asset investment, the primary goal could be to cushion or minimize capital loss, generate income or seeking capital appreciation. Consequently, the investment strategy applied by the investor in the portfolio selection was aimed at income generation and capital appreciation objectives (Francis and Kim). The portfolio selection is made of six stocks namely Google (GOOG), AT&T, TSL, BAC, and Tesla (TSLA). In addition, a corporate bond of Time Warner Cable Corporation has been selected in the portfolio and five years United States Government bond issued Treasury bond has been considered in the investment portfolio.

Corporate and Treasury bonds have been considered in the portfolio investment for diversification purpose of the investment risks. This helps the investor to spread the investment risk to avoid incurring heavy losses due to unforeseen market volatility in future (Fabozzi and Drake 68). The portfolio investment selected by the investor has the potential of allowing income generation and capital appreciation in future due to the characteristic of the various assets considered in the investment.

One of the reasons that depicts that the investment portfolio is the pricing of the stocks selected (Reilly and Brown 33). The value prices of majority of the stocks selected in the portfolio investment are relatively undervalued. This is because the recent acquisitions and mergers by Google Corporation, Tesla Corporation, Trina Solar limited (TSL), AT&T Corporation, and Bank of America BAC depict that the profitability of the companies is likely to increase in future.Mergers and acquisition are essential for a company since it helps the company to expand its investment for high revenue generation in future.

The companies will be able to generate more profit in future that is vital for dividend generation and stock demand in the stock market (Fabozzi and Drake 62). Thus, the current pricing of the various stocks considered in the portfolio investment are undervalued since they do not reflect the potential growth of the stocks. Consequently, the undervaluation of the stocks considered in the portfolio investment will ensure the capital investment of the investor appreciates in future. This is because the high demand of the stocks in future due to high profit generation will cause the price of the stocks to rise significantly.

Accordingly, the value of the stock assets will increase significantly for the investor in future. Similarly, the high potential of the stocks growth due to profitability expansion in future promises high and consistent dividend issuance (Reilly and Brown 39). Thus, the investor will be able to achieve income generation objective through the portfolio investment selection. In addition, Time Warner Corporate bond that matures in 2032 promises a coupon rate of 7.7% annually and yield to maturity of 4.57%. Thus, the investor will be able to generate a consistent income until 2032 equivalent to 7.

7% of the capital investment of the corporate bond. In addition, the five years U.S Treasury bond issued in 2014 promises a yield to maturity rate of 1.52 %. Consequently, the investor will be able to appreciate the capital invested in the Treasury bond investment by 1.52% by the end of five years due to risk free nature of treasury bonds and bills (Francis and Kim 78). Accordingly, the portfolio investment criteria employed by the investor has high potential of enabling income generation and capital appreciation in future.

Work CitedFabozzi, Frank, J and Pamela, Peterson Drake. Finance: Financial Markets, Business Finance, and Asset Management. Boston, OH: John Wiley & Sons Inc, 2009. Print.Francis, J, C and D Kim. Modern portfolio theory: Foundations, analysis, and new developments . Hoboken, N.J: Wiley, 2013. Print.Reilly, Frank, K and Keith, C Brown. Investment Analysis and Portfolio Management. Mason, Ohio: South-Western Cengage Learning, 2012. Print.