Investing Concepts Part Deux

This time around we didn't really have any questions about our concepts as we have one helluva prof. (insert extra credit here) Searching through some documents and things however we came across a few concepts that were interesting.

1) Random Walk Theory; what is the random walk theory you ask. Well we will tell you. It all started way back in the olden days, 1973 to be exact. There was a man named Burton Malkiel who along with being a man was an author. He wrote the wall street classic "A Random Walk Down Wall Street". It suggests that market fluctuations and stock prices cannot be predicted by what has happened in the past with them. The theory states that stock price fluctuations are independent of themselves, but over a period of time prices maintain an upward trend.

2) CAPITAL ASSET PRICING MODEL, or the reason we chose this CAPM. Pretty awesome reason, we know. CAPM was originally developed in 1952 by a gentleman named Harry Markowitz. This model is used today to describe the relationship between risk and expected return, and it serves as a model for the pricing of risky securities.


3) Asset Allocation is a smart thing to do! If you are an investor and you are going to have your money invested for a long time then stocks are a good area to put it in. They generally have grown more over time than any other investment instrument. If you are an investor with a short amount of time, however; asset allocation suggests that you invest with other more stable tools. It is all up to the investor and what their goals are. 

Week 8

THE END IS HERE!
Well its been fun and we have learned about investing in stocks. It is a crazy business full of highs and lows, and I personally do not want to be a stock broker not sure about Megan though.
As was directed we have sold everything and it is not a winner. We wanted to win the whole game, but that didn't happen. We did beat the market though as our portfolio is now worth around $206000.00. We started with $200000.00, and grew thats always a good thing!

It has been a blast and we cannot wait to play again next semester!

Week 7

It is almost the end and we need a wicked big push!


We bought into a few big names this week hoping that they can help us out to get to that top spot. Not sure if investing in the big stocks will help or if we should go into penny stocks. It is always a gamble in the penny market, and  our portfolio just can't handle it right now I don't think. We do need to play it safe to beat the market.
Telus was our first buy. With the recent release of the I pad and I phone 4 we believe that having a wireless company in the books is pretty smart. If only we had thought of it earlier in the game. People will be flocking to buy these items for Christmas and there is a need for a wireless provider to get them on the network. New phones from other companies as well will only help with the people buying from Telus. Telus has released their new television program as well called Optic TV. It is supposedly faster and easier to use than the other companies digital cable. We will find out. This is a great buy though.

On the American side we chose to buy stocks from the Starbucks Corporation. We chose this company because they have a “STARBUCKS red” card that customers can buy and use for purchases. The proceeds from the red card go to the Global fund that helps people who live in Africa with HIV. To date, the contributions have provided the patients with enough medicine to last up to 14,000,000 days. http://www.starbucks.com/responsibility/community/starbucks-red a phenomenal program.


Lastly we bought stock in Coke. The polar bears are back and this is apparently the biggest sales season for the soda king. People love to support the efforts of coke when they are saving the polar bears. Kind of a really cool program where through MyCokeRewards program people can earn points and donate to the wildlife fund. Coke has made it clear that they want to help reduce the environmental footprint that humans put on the earth.
We seem to invest in companies that are doing good things for the world lately. The giving season is upon us I suppose and we will support those that feel the same way. This method will only pay dividends!

Week 6

Only one trade for us this week as we are trying to see where the rest of our portfolio is going. Call it laziness or being tentative we really need to come back and get rid of Jaguar Mining. It will be a big hit for us but on the bright side we bought stock in Reitmans Canada. This is a clothing company that deals in high end clothing for women. They have a few different styles for averaged sized women, petite women, plus sized women, and a great idea is their plus petite collection. This is a style where the bigger sized women can get the same look and feel as the petit sized women. It is constructed the same just on a different scale. We believe that with Christmas coming up there will be a lot of people shopping here and that the profits and stock will sky rocket. Everything else is holding steady and any retail stocks that there are should start to jump.

Week 5

Jaguar Mining has been dismal. It has gone down to almost ($6000.00). Not cool at all!
I am not really sure what the bad growth is caused by, but I think that like last week it is just a slow week. Holding on still will be the best course of action.

We have had some good progress with LuLu again but generally it stays strong. People love to work out and again they keep opening new stores!

There really is not much to report on this week.

All we can do is wait and see how things shake down this week!

Investing Concepts!

Short Sale: I had trouble understanding what a short sale was but I found a great definition that helped me understand very well. What I understand a short sale to be is when an investor sees a stock that they believe is overpriced and looks to drop in the near future. The investor borrows said stock from someone who owns it already. They promise to return it at a later date and also generally there is a fee that comes along with borrowing the stock. After they have borrowed it the investor then sells the stock. They buy it back at a later date usually within a few hours after the stock has dropped. The profit is collected by the investor. The profit comes from selling the stock at a higher price than they buy it back for. It is then returned and you have made money hopefully!

Market Timing: I read about this in Money Sense magazine. It made me wonder what it would be like if you were to miss out on the really big days in the stock market. I found a cool little blurb on this on the site http://www.mathisen.ca/fyi.htm Basically it says that if you were invested in the S&P 500 over the past 16 years straight your return would be 14.51%. If you try to time your investing and missed 40 of the best days (which is only 1% of the total amount of days investing) your return would be around 5.63%. What I am gathering from this article is that you can never really predict whats going to happen, but we can make educated choices and guesses as to what may happen.

Hedge Funds: I also read about hedge funds in a magazine the other day, and wondered how I might get into one. It has been coined as the "mutual fund for the ultra rich" I thought to myself hmmm that would be nice. I dug a little bit deeper, and found out that hedging actually means to try and reduce risk. Hedge funds; however, try to maximize the return on the fund. They require very large initial investments, and are not very liquid as you have to keep the money in the fund for a year or more. Hedge funds are not regulated by the government, as to be involved in a hedge fund the investor usually has a good knowledge of investing.
Hopefully one day I can get into a hedge fund! Might be fun!

WEEK 4

NETFLIX! Holding onto Netflix has paid off in great amounts. The after market trading on the 20th has helped our stock go from being down -$2400.00 up to $1200.00, and it is continuing to rise. Attached is a great article about how Netflix has turned around in the past couple of months and become a streaming video company that mails out dvd's. (they used to be a mail out dvd company that streamed a little bit)
http://www.theglobeandmail.com/news/technology/netflix-eyes-streaming-service/article1766655/

Precision Drilling hit a 52-week low at the start of October, and we got in right before it started to climb again. This company has had phenomenal growth in the past week. Their main line is oilfield drilling specializing in safety. There is always a great need for safety in the oilfield. The stock dropped after James Cameron's visit to Norther Alberta, but I have a feeling that the new ways of drilling and the safety that Precision takes has had a good impact on the company!

We also invested in Precisions stock up north here on the Canadian side, which has also seen amazing growth.

Jaguar mining and Madison Minerals INC. have done terribly for us. They have only been dropping and have made it hard for us to recover from this slump we have been in. I do believe however that these companies have just had a short week, as their stock have been jumping by huge amounts in the past year. Continuing to hold on them will be our best bet!