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How has the fund fared - Essay Example

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How has the funds performed Annualized funds return Berkshire Hathaway (NYSE) Microsoft (NASDAQ) General Electric (NYSE) Original share value 147,113.09USD 27.93USD 22.62USD Share value 150,247.79 USD 27.74 USD 23.28 USD Return 3134.7 -0.19 0.66 %+1 1.021 0.993 1.029 [1.021*0.993*1.029]*12= 12.52-1=11.52 The annualized return = 11.52% What dividends were received?…
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How has the fund fared

Furthermore, a company cannot be able to pay dividends if it is not making profits. Supposing a company is going through financial difficulties, such as high cost and declining sales that lead to losses, it becomes very difficult to afford funds to pay dividends to its shareholders. In such a situation, the company is forced to cut the dividends paid to its shareholders in order to conserve cash so the company can continue existing. It is for this reason that we shall assume that the dividends paid by the three companies will depend on their returns. Therefore, as shown in the table above, Berkshire Hathaway (NYSE) will be able to pay the highest level of dividends followed by General Electric (NYSE) and finally Microsoft (NASDAQ). Considering dividends payout as the factor determining the performance of the fund, Berkshire Hathaway (NYSE) will be the most attractive whilst Microsoft (NASDAQ) will be the least attractive. What where your biggest mistakes and successes? To evaluate how well or bad our fund has performed, it is important to reflect on different ways that are used in measuring stock performance. What is more important in doing this depends on the current type of investment and the exact information that we are seeking. For example, considering that we intend to sell our stocks in the short-term, with the aim of making profit, then the most important consideration will be assessing whether the market price of our stock is souring, declining, or if it has reached a plateau. With this in consideration, it will appear like we made a mistake by investing in Microsoft (NASDAQ) because its price is declining. Alternatively, if we assume a buy-and-hold kind of investment, then we shall be more concerned about the value of the stock many years to come, in which case the most important factor to consider is whether each stock has a pattern of earnings growth, which yields future expansion (Ryan and Deci, 2004). The other important aspects to consider when investing include reward and risk. Measuring stock risk can be a bit difficult and that is why it was easy to make a mistake when investing in this fund. However, it is very easy to measure how the individual stocks performed from the financial statements - this measure could have been successfully used because the profitability performance reflects how the shares faired, at-least in the short-run. In other words, the profitability of these companies reflected their share price appreciation. In view of this, investment in Berkshire Hathaway (NYSE) was a very successful decision, but investment in Microsoft (NASDAQ), whose share price performed poorly, was a bad investment. Despite the fact that investment in a company such as Berkshire Hathaway (NYSE) was a success because the company’s profitability as well shares performance was remarkable, the aspect of risk, which is more difficult to measure, can turn an investment that was preserved successful in the short-run unsuccessful in the long-run. Actually the issue of risk becomes even more difficult because different individuals have different perspectives of what risk entails. Some individual may perceive that a risky stock is the one that is not worthy its price, and that a stock is less risky when the price that was paid to purchase it is considerably below the company’ ... Read More
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