The purpose of this project was to get some exposure to the stock market and get a sense of how it works. As finance majors, the stock market encompasses a considerable amount of the material covered in our emphasis, and having a project in which we are free to pick and trade stocks can certainly add value to the knowledge gained in our courses. Aside from the fake $100,000, everything very was similar to a real-life platform; the ticker symbols, gains/losses, and even the trading fees. Such realistic simulation gave us a chance to use some of the platform features we’ve been learning about throughout the semester such as limit & stop orders and trading practices such as short selling & buying on margin.
For my stock portfolio I followed a passive management strategy rather than an active management strategy. The reasons for such strategy included lack of time to follow the stock market and analyze each and every stock within my portfolio, and most importantly because of the efficient market hypothesis. As it has been made very clear in class and in our textbook, those investors engaged in an active management strategy have not been successful enough to justify the resources invested. Rather than waste my own resources, I chose to use those investor’s experiences and follow a passive management strategy.
When I first created my portfolio, I included five stocks: General Mills (GIS), Mattel (MAT), Nike (NKE), Sony (SNE), and United Airlines (UAL). Given that we are in the fourth quarter of the year, known for the holidays and spending, I decided to look into the stocks of companies that tend to do well during this season of the year. Thanksgiving and Christmas are known for being holidays in which food plays a big role, which is why I decided to include General Mills (GIS), the seventh largest food processing company in the world. Other reasons why I chose General Mills (GIS) is because it’s a well-diversified company, high profit margin, higher planned dividends, and international growth. General Mills (GIS) is highly diversified, consisting of $4 billion invested in the cereal business, $3 billion in the yogurt business, and $3 billion in the snacks business. General Mills (GIS) has a profit margin of 9.76%, that’s 30% more than other food giants like Kellogg and Campbell Soup. Based on its international growth and profits, it is also planning to increase its dividend by 15% in 2014. In the past five years General Mills (GIS) has grown 8% internationally, and it is expected to capture more market share after the launch of 200 new products during the first two quarters of 2014.
When it comes to Christmas, toys are the number one gift for children, as a result I chose Mattel (MAT), the largest toy producer in...