Macro Stock Project

STOCK MARKET PROJECT

Due December 12 @ 9PM Please email it to me rather than give me a hard copy.

The goal of this project is to apply economic thinking to common institutions, in this case, the stock market. Stock reflects ownership in a company. The price of a stock relies heavily on individual expectations of future firm, industry, and economy performance as a stock exists as a single firm, an industry entity and economic entity.

By picking a stocks in an individual industry and then comparing changes in a stock price to market and economic changes we can see points where something happens, to a stock, an industry or the economy.

You will choose 4 or 5 stocks in an industry, the stocks could be domestic US companies or international companies which operate in the US. Use a broad index such as the S&P 500 and compare the changes in the value of your stocks to the market in general and use economic reasoning to explain the movement of a firm, industry and the economy in general. 

The graph on the next slide shows the % change of the S&P 500 over the past 2 years and compared to the % change of 4 stocks over the same period. The 4 stocks are in the shipping business and are CSX, Norfolk Southern, Fed Ex and UPS. The S&P 500 index has gone up 37% over the past 2 years. Over the same time period, UPS has gone up 8.4%, Fed Ex is up 41%, Norfolk Southern has gone up 92% and CSX has increased 141%.

Obviously, CSX has been doing something right, Norfolk Southern Is close behind. Both are railroads and both have done significantly better than the S&P 500 index. 

Fed Ex has grown at about the same rate as the market, but UPS has been a laggard, far behind Fed Ex and the market in general.