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Complete Investment Challenge: Step One
I already chose the stocks and ETFs. They are listed in the file attached. Please provide a screenshot of the excel graph on the paper as well before the reference section. Please provide the file to the Excel sheet as well.
Begin to construct your How the Market Works (HTMW) Stock Challenge portfolio by choosing at least 10 stocks and ETFs. You must hold at least 10 stocks during the game. You may hold ETFs as well but those are not counted as individual stock investments. There is no limit on how many investments you can hold. I suggest you choose stocks from different industries or sectors to help diversify your account. It is okay to overweight certain sectors if you have a reason to believe that certain sectors will outperform in the next quarter of the year. Trading will begin based on the start date outlined in the WELCOME announcement. Please refer to the WELCOME announcement for creating your account and you will need to wait until the start of the challenge to make your first trades.
Create a stock portfolio consistent with your strategy or style that you think will outperform the S&P 500. Discuss how well you think this particular style will do given the current market environment. Also document where you found the information required to implement your strategy. You are welcome to use a stock-selection system developed by someone else (Momentum, Growth, Value, Blended, Contrarian, Tactical Allocation, or Warren Buffet are some examples). You can find examples in popular press publications like Money, Fortune, or Forbes, or on the Internet. Interviews with mutual fund portfolio managers are an excellent source of trading strategies. Your strategy does not need to be complicated. For example, maybe you decide to buy growth stocks or value stocks based on a target P/E ratio. Briefly describe your strategy and explain why you think it might beat the S&P 500 index over the time of the trading game. In any case your portfolio should include at least 10 stocks or ETFs. You are free to buy and sell stocks at any time during the game, but you must be at least 50% invested at all times. For example, buying 10 stocks and holding them until the end of the game will meet this criteria. However, a well-diversified portfolio typically requires 30 stocks. The use of ETFs could help reduce the number of required investments.
Describe your investment strategy or style that you intend to use to play the game that is consistent with your IPS. (Buy and Hold, Growth, Value, Momentum, Blended or something else).
PLEASE NOTE: HTMW does not do a great job of comparing your portfolio to the S&P 500 OR tracking your individual trades. Therefore, please set up an Excel file that you will use to compare your performance with the S&P 500.
Please use the following link to access the Morningstar XRAY. You will need to sign up for a free trial to do this.
https://www.morningstar.com/portfolio-manager
You are required to create a graph in Excel comparing your portfolio to the S&P 500. To compare the S&P 500 use the ticker “SPY”. This is for an S&P 500 Exchange Traded Fund (ETF). Yahoo finance no longer allows the S&P 500 data to be downloaded. Therefore, we will just compare to the SPY data which should very closely mirror the performance of the S&P 500 Index.
List all strategy sources and references (if any).____________________________________________
List stock selection and research criteria used (if any)._______________________________________
Company Data Resources
Valueline is another top rated research database that can be found on PSU library databases. The dashboard provides daily insights on the current market environment. You can also create a watchlist for news on the dashboard section of Valueline.
Another excellent resource under the psu databases is Hoovers. At Hoovers there is very useful industry data and companies are listed by industry sector.Summarize your reasons for your initial stock purchases.
For each stock briefly describe key factors for your decision to include the stock in the portfolio.
Create a graph in Excel or summary of your portfolio compared to the S&P 500. In your memo discuss differences and why you believe your portfolio will outperform the S&P 500 over the next quarter. List sources of information used for stock and style selection.
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