Final Report on Stocktrack Portfolio Adjustmnet - Essay Example

Insert Insert of the supervisor Insert of the Insert assignment is due 1Objectives of my investment decisionOne of the objectives is to ensure that investment decision made on behalf of the client adheres to the best profession conduct, applies appropriate investment ethics, is honesty and reached after relevant research. As such, before making investment decision, clients will be informed about the investment plan, benefits and risks involved, the maturity period of investment, and the terms and conditions.

Ensuring accuracy in future benefits or risks of a specific stock by professional application of analysis tools such as stock valuation, historic price correlations, expected return of assets, and CAPM.2.The final result of the returns of initial investment (HPR) is 3.93% My initial expected result is 0.03 or 3%From the specified figures, it is evident that the final results exceed the expected results, which clear show that the performance of the market was good and so the prospects of investing in the market are positive in terms of maximum benefits and minimal risks.

Actually, there is a high probability of the investor benefiting from his investments.3.Generally, the performance of the portfolio against benchmark index posted an outperformed portfolio. The outperformance can be attributed to improved economy that is just recovering from financial crisis thus enhancing investor’s confidence, vigorous positive public relations by organizations and the market that has played a key role in reducing consumer doubts and promoted their confidence in some organizations such as Goldman Sachs Group, Inc.

that were victims of unsubstantiated rumors, and the need by market analysts to set new stock goal that reflects the real financial performance of the organization without the influence of external factors such as investor’s loss of confidence.4.There bullish and bearish trends are driven by increase or decrease in investor’s demand for a specified stock. The first bullish trend was caused by high prospects of economic growth as a result of stimulus package given to companies to protect them from going bankrupt.

As a result of the bullish trend, the market underwent correction to reflect the reality of the performance of company in the market. Most of the stock was devalued and so the rate of investment in them went down, but after a while the companies started posting positive results hence stimulating confidence in the market .5.Adjustment 1, which is based on diversification concept worked better because the rate of return and correlation are independent and so the risk in the portfolio can be minimized without affecting the rate of return.

Adjustment 3, which is based on trend analysis, did not work well for my analysis because it only shows the theoretic effects of investor’s demand on the stock. In addition, it does not show the real risk or benefit the stock has in terms of future business performance and whether its stocks are risky or beneficial for investment.6.The specific stock has a beta value of 1.17 and is conservative in nature.The duration for the portfolio is 3 years, which is intended for the purchase of a personal car.

Capital allocation is $9990.60% is assets while 40% is cash allocation. The allocation of capital will be high at the beginning.The number of stock is 1.6 million shares. The average- risk in 3 years (rf) is 2.5%.The beta value is 1.17.Expected return is 0.11 which is a clear indication of positive prospects of getting some benefits from the stock.The stock is an overperforming stock that is stimulated bullish trend among the investors. This is because its returns are + 5.42 %, its HPR is 5.70% that is beyond that presented by S&P500, and the organization’s continuous innovations and development of new products makes it attractive to new investors.

The type of investment technique is alternative investment strategy with an annual frequency. It aims to generate a positive return in both bearish and bullish market conditions.The market that I would use to monitor and manage my portfolio is New York Stock Exchange(NYSE).This is because many companies are listed in it and it offers prompt update about each listed organization’s performance.Works CitedPreda, Alex . Framing Finance: The Boundaries of Markets and Modern Capitalism. University of Chicago Press.,2009.Print.

Mandelbrot, Benoit & Hudson, Richard . The Misbehavior of Markets: A Fractal View of Financial Turbulence. New York: Basic Books,2006.Print.Hamilton, Patrickson. . The Stock Market Baraometer. New York: John Wiley & Sons Inc ,2008.Print.