Team Members: Eissa Alireza 1. List the two most important criteria in your selection process and indicate whether they are fundamental or technical (price & volume related) factors. (4 points) Primary Factor: Volume (technical) Second Factor: earnings (fundamental) 2. Identify your three largest investments (long or short sales), in dollar terms, to date and justify their selection on the basis of your criteria. (3 points) Selection Criteria High Return/Risk versus Low Risk/Return Active trading versus Buy-and holding Economic/political sensitivities Special industries versus Broad diversification Selection criteria within industry Timing & Margin -Market versus Limit order -Cash versus Margin account Current income versus Capital appreciation Direct versus Indirect Investment Other considerations Choice a. b. c. Selection Criteria Active trading versus Buy-and holding Current income versus Capital appreciation Selection criteria within industry 3. For these three largest investments calculate the holding period returns for each in dollars and percentage terms. (6 points) Investment a. AAPL (138.92, Nov 7) Holding Period Return in Dollars 851 dollars gained. 5.77% return on invested capital. Holding Period Return in % terms 67.12% b. BLK (676.30, Nov 7) 643 dollars gained. 8.69% return on invested capital. 39.19% c. TSLA (197.08, Nov 7) 2700 dollars lost. (16%) loss on invested capital -13.74% Indicate below whether the three investments beat the return on a relevant benchmark. (6 points) Benchmark Benchmark’s Holding Did you do better or Period Return in % terms worse than Benchmark? a. Dow Jones 2.19% Better b. S&P 500 4.86% Better c. S&P 500 4.86% Worse 4. On a separate, typed sheet, list and discuss, in bullet points, the major event(s) or condition(s) (company, industry, macroeconomic factors) that resulted in better or worse performance for each of your three largest investments. (6 points) Apple: - - - Apple had a production problem when they announced the iPhone 14. They went in thinking that not many people will buy it due to the economic situation so there was less supply. They also had another problem where China got struck with a big covid wave and so they locked down most areas. In these areas Apple had their big factory which was forced to shut down and limited the supply that is available which led the stock price to fall. The increase in price is attributed to the services they’ve been offering and the bigger availability of consumer wearables. This helped the performance of the stock to rise up and make me a good return. Blackrock: - Blackrock struggled for a while with the current economic state. The Feds keep raising interest rates to maintain inflation but it’s affecting everyone in a negative way which is not allowing them to grow healthily. The Russia/Ukraine war also caused them to drop in price. War’s always negatively affect the stock market on a global level. Blackrock also keeps purchasing more assets, growing their portfolio which made me see that they were a great buy. The stock performance was very well and attributed to them expanding their portfolio. Tesla: - Tesla has been facing a lot of increased competition in the field. Lots of car manufacturers have been entering the electric field and are coming up with cars that have better technology and better performance. There is also a switch with the environment and political factors as governments are requiring car manufacturers to switch to electric vehicles. Also, the uncertainty of the economy is causing people to be more hesitant on buying new things, so Tesla isn’t meeting their targets. Tesla also has the same problem as Apple in which the covid issues in China are causing production to slow down. Tesla’s performance has been very bad as I made a loss on the stock. However, do expect them to bounce back as soon as all these problems are done, only time will tell.
