Undertaking investment in the stock market requires understanding of various parameters of the equity determinants (Levišauskait, 2010). Managing a portfolio requires arriving at the right balance between debt and equity investments, keeping in liquidity to ensure probability of profits. In the current investment analysis an initial portfolio amount of $1,000,000.00 was allotted, which was the sum total of buying power and available cash (Datu Bua, 2018). The investment was conducted with in-depth understanding of financial knowledge as given below.
ANALYSIS
The investment was done taking into view aggressive market position in order that maximum returns can be made. There have been no investments done in debt or debt related securities and only equity investments have been considered (Reilly & Brown, 2011). Apart from making investment into equity securities there has been cash balance left on which interest was earned at the rate of 3%. I began trading at stocktrack.com on 20th July, 2018 and till date my investment position has been reflected upon.
The investment was undertaken in Australian Dollars Currency and benchmark for comparing of stock returns was assumed to be S & P 500 Index. The index was used for comparing returns from the Company against market average returns. I had purposely made investment into well-known companies in the market to maintain constant liquid position. The Companies in which I invested constitutes of;
The basis for investment undertaken in this current study was primarily liquidity, post which the Company’s individual revenue analysis, dividend payout, EPS earnings have been analysed (DeFusco, McLeavey, Pinto, Anson & Runkle, 2015). The stocks were purchased in relatively lower price compared to the prices at which they were sold. Identification of stocks was primarily on past performance which they delivered in the equity market.
The S & P Index closing was at 6286 and currently it is at 6298. Meaning the index has given a total return of 0.19% from 20th July 2018 till date. My portfolio has been capable of generating a return of 5.93% from above the comparison index that I had undertaken. It means that my stock selection had been effective and I have been successful in developing a profitable portfolio and will be able to undertake such decisions in the future for the client as well.
The guidelines which have been followed by me while investing was to identify top gainers and losers in the pat period in the market. I selected large capital stocks, which has stable business objectives and have orders. As the mining companies which I have selected, gets regular export orders from its clients. So, stock pickers while making their selection needs to not only follow top gainers and losers but also look at the company vitals for making their investments. This will allow them to gain substantial returns. However, I would like to add that in certain investments I have acted impatiently and have sold stocks inspite of them making loses for me. I need to stick to my patience so that in future I am able to sell my stocks at prices higher compared to prices at which I have purchased them.
After undertaking this exercise I felt that I should have also taken an analysis of revenue statement and other financial statements for the companies. A brief analysis of financial statements would have given me capabilities to undertake my investment in a detailed manner and make more concrete decisions for them. I could have also identified some small capital stocks and added to my portfolio to be able to generate abnormal returns for my portfolio.
However, this has been my first experience in the equity market and despite that I have been able to make substantial returns on my investment. Moreover, I would like to add that I always kept some amounts of cash as liquid so that in any case I see a stock capable of giving returns I could invest in it. I have earned interests on my cash holding as well apart from the regular investments. Such cash holding is necessary to allow me flexibility to undertake decisions pertaining to varied investment alternative.
Looking back now I feel that some portions of my investment I could have done into debt market as well. However, due to lack of detailed knowledge regarding debt market I had not undertaken any risks regarding it. Debt markets are highly capable of generating above average returns over a shorter time spans. But I need to know the ways in which debt market performs, meaning I need to analyse rating of debt papers available for judging their credibility and understanding their returns. In my future investment I have identified a few journals and books from where I can learn regarding the ways to undertake debt related investments.
This scope of undertaking investment provided extreme excitement as well as pleasure. Since the start of my college days I was always thrilled at the thought of making m y investment. Through this endeavor I have been able to perform my wishes. This endeavor has enormous learning experience for me as well as for my future. It will guide me to undertake more investments in the future.
Datu Bua, M., 2018. Investment Analysis and Portfolio Management.
DeFusco, R.A., McLeavey, D.W., Pinto, J.E., Anson, M.J. and Runkle, D.E., 2015. Quantitative investment analysis. John Wiley & Sons.
Levišauskait, K., 2010. Investment analysis and portfolio management. Leonardo da Vinci programme project.
Reilly, F.K. and Brown, K.C., 2011. Investment analysis and portfolio management. Cengage Learning.
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