EXECUTIVE SUMMARY 2023
Investment success begins with us
AUGUST 1, 2023
INVESTMENT GOAL INC.
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Table contents
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Introduction………………………………………………………………………………........
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Investment Objectives……....……………………………………………………………........
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Investment Strategy………………………………………………………………………….
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Portfolio Development………………………………………………………………………
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Asset Allocation
Security Selection
Security Analysis
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StockTrak Simulation Results……………………………………………………………….
 Conclusions………………………………………………………………………………….
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I) Introduction
Investment Goal Inc. is an established private wealth management company with 25 years of experience
specializing in Active Portfolio Management. As fiduciaries to our clients, our primary goal is to provide optimal
investment solutions that align with their unique financial objectives. This report focuses on the ongoing
maintenance and management of an investment portfolio designed for investors with a higher risk-reward profile,
who seek to maximize capital gains through an aggressive investment approach with a diversified portfolio. At
Investment Goal Inc, we remain committed to our fiduciary responsibility, continuously striving to provide our
clients with superior investment solutions tailored to their specific goals and risk profiles.
II) Investment Objectives:
Our 35-year-old client has set investment objectives centered around achieving long-term growth while
prioritizing capital preservation. Our client decides to invest $500,000. With no resource constraints and a lengthy
investment horizon exceeding 30 years, we have a unique opportunity to devise a strategic and patient investment
approach that capitalizes on long-term market trends.
III) Investment Strategies:
To evaluate the performance of their investments over time, our clients have established a benchmark rate
of return expectation of 15% based on historical rates. This will serve as a measure against which their portfolio's
performance will be assessed. Our client has opted for an aggressive investment approach by selecting a high-risk
portfolio. Additionally, they anticipate allocating approximately 20% of their investment portfolio for short-term
liquidity needs, including trading options, favorable price of securities and unforeseen expenses. In conjunction
with this strategy, they are interested in reserving a portion of their funds as liquidity to capitalize on potential
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opportunities and acquire securities at more favorable prices when market conditions are deemed suitable. This
prudent tactic aims to enhance overall portfolio performance through strategic timing of investments.
To align with their long-term growth objectives and risk tolerance, we will develop a personalized
investment plan. This plan will emphasize appropriate asset allocation, diversification, and continuous monitoring
to optimize the potential for capital appreciation while safeguarding their invested funds. As market conditions
evolve, we will conduct regular reviews and make necessary adjustments to the portfolio, aligning it with our
clients' evolving financial goals.
IV) Portfolio Development
1) Asset Allocation:
The client’s portfolio consists of 80% investment in stocks and 20% in cash. It was determined to not
invest in fixed assets now because the desired approach is aggressive. The cash portion is intended for future
options purchases. We diversified our stock asset allocation into small cap, mid cap and large cap. Because the
client’s risk tolerance is high, the small and mid-cap make up 62% of the total portfolio.
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2) Security Selection:
The security selection strategy for this specific portfolio involves diversifying the securities into
multiple sectors to maximize the potential returns and reduce the overall risk. With this objective in mind,
securities were evenly diversified into 11 sectors. By not focusing on one single sector and spreading the
investments around different types, we are aiming to reduce the volatility of the portfolio over time.
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3) Securities Analysis
Five stocks were selected out of the 53 to perform security analysis. MBWM, CVI, CARS, VALU and
MPC were used to run correlation and regression analysis. The correlation analysis demonstrated that overall,
these stocks were not correlated to each other. The only exceptions were MBWM and CVI as well as CARS and
MPC which turned out to be moderately positively correlated. Another observation from the correction analysis
was that a few stocks were slightly negatively correlated to each other, which is a potential good factor since this
tells us that if one fails, the other one is most likely to get a boost.
The R square is 76%, which corroborates that the portfolio is considered well diversified since it is
greater than 70%. Because of this we can rely on Beta to measure the total risk.
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The expected return was calculated for these five stocks using their beta, the risk-free rate of 6% and the
market risk of 8%. We used this information to obtain the actual return as well as the Treynor Ratio. The results
forecasted to be good investments due to the high ratios.
V) Performance & Growth Projections
MBWM
Mercantile Bank Corporation (MBWM) has been part of NASDAW and has had wonderful performance
over the past years. MBWM has had a growth of 15.13% the past 5 years and expected to grow 8% the following
5. This stock is in the finance industry and has show us a 39.03 52 week high and a 7.01 P/E ratio. Being a small
regional bank based in Michigan with $5.2 billion worth of assets, we an expect this to be a good year for
MBWM.
CVI
CVR Energy Inc. (CVI) being part of the Energy Mineral industry, has a current 5.62 EPS and 6.49 P/E
ratio. Being founded in 1906 down in Sugar Land, TX, CVR energy has held its name for engaging and providing
petroleum refining and manufacturing activities for the US. We are currently expecting this stock with a 5 year
growth of 6.65% as we furthe progress in the industry.
CARS
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Cars.com Inc (CARS) is part of the Technological Services industry, and we would hope this can keep up
as technological advances happen. This stock has demonstrated a 5.71% growth the last 5 years, 0.3547 EPS and
63.43 P/E ratio. We are currently expecting a 19.60% return over the next 5 years, as this company continues to
demonstrate its productivity in the technological services.
VALU
Value Line Inc (VALU) is also part of the technological services industry with a current 118.4 high and a
28.68 P/E ratio. This stock has demonstrated a run for its money when the company gave a $11.4 million income
from operations, a 6.2% increase from last year. Value Line also publishes a range of proprietary investment
research in print and digital formats with research including the areas of Mutual Funds, ETFs and Options.
MPC
Marathon Petroleum Corp (MPC) is with the energy mineral industry with a 138.83 high and 3.97 P/E
ratio. MPX has also demonstrated a 46.82% in growth the past 5 years (per annum), with 75% of its stakes being
held by institutions under their possession for longevity. This stock has proven to rise up in the market, even when
ETF’s like the S&P 500, Dow or even Nasdaq proceeded to dip the past couple of days. We can hope MPC being
from the mineral industry to keep providing the world the required services to maintain smooth operations.
VI) Stocktrak Simulation Results
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Chart above demonstrate’s portfolio valuation performance over the span of 22 days.
Chart above compartes Investment Group 3’s portfolio to S&P 500 ETF
Portfolio performance (as of July 29th 2023):
Value: $521,847.24 Cash: $98,628.04
0.003958814 Portfolio Retun: 4.37%
Sharpe Ratio: 10.0208 Alpha: 0.002353011
Buying Power: $614,933.92
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Beta:
VII) Conclusion
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