FINANCE ASSIGNMENT

FINA 402: INVESTMENTS

ONLINE TRADING REPORT

The point of the written report is to provide a clear, concise account of your trading activity and explain what lessons you learnt. The actual performance of your account is irrelevant to the grade. The report should be e-mailed to me at HYPERLINK "mailto:[email protected]" [email protected] before the end of Friday Dec 12th.

The content of the report should include:

An overview of your account’s general performance (final balance, low point, high point, average return, volatility, etc.)

A detailed description of 2 or 3 trades or strategies which were especially successful or especially unsuccessful.

There is some flexibility in this step:

If you had one trade or one strategy which was particularly interesting you might just want to discuss that one.

If you want to cover more trades (6 or 7) in less detail that is also fine.

If you had a broad concept in mind to investing which was more important than any individual investment then you can discuss that instead.

Focus on what you were thinking when you implemented the trade, how it ended up working out, and reasons why what happened was or was not in accordance with your original thinking.

Conclusions about what you’d do differently next time, or what worked and would be worth repeating in the future. Specific things to focus on would include: timing of trades, the impact of transaction costs on your performance, risk-return trade-off, success of hedging strategies etc.

I encourage use of tables, charts etc.

The report should be approximately 750 words

The grade assigned for the report is based on the clarity of the report and the extent to which your comments and conclusions appropriately match what happened in your account. Neatness and professionalism with regards to presentation will also be factored into the grade. Poor investing results will not affect your grade as long as you explain what happened clearly!

Trading Activity

You consider the online simulator an opportunity to experiment with any investing you wish to try. You do not need to consult me prior to implementing any trades.

However, because I know many students are new to investing and have little experience at something like this, I recommend the following investing activity:

Invest approximately 60% of your money in an S&P 500 ETF (see ticker SPY)

Check the stocks included in the ETF by clicking on the “Holdings” link in Yahoo! Finance (or similar online resource)

Research 7 or 8 of the stocks listed in the ETF’s holdings and choose 4 of them to invest the rest of your money in (10% in each of the four). You may stick with these four stocks for the rest of the semester, or sell one or more of them at any time.

Monitor the account as the semester progresses. In particular, make note of the following

Any particularly large increases/decreases in the ETF or any of the individual stocks. What appeared to be the reason?

Any times you considered selling any of the stocks ... did you end up selling?

If not, what convinced you to keep holding the stock?

If yes, keep following the stock and see if your decision to sell appeared to be correct. What stock did you replace it with and why?