For the second and final Action Project in Economics I had to make an investment portfolio and show how I would invest our money if I had the funds. I was given set time frames and told to research companies and figure out the risk involved and what their expected return would be for each different time frames. I was allowed to choose an amount to allocate myself for the project and chose 15,000$ because it is more about the percent allocation anyways. The main problem I had with this project was that the site I was asked to use for the portfolio was very limited and didn’t allow for commodity or currency exchanges. This led me to just creating my own way of representing my portfolio. The main thing I learned from this project was the research time involved in picking a few stocks.
As an investor I like to take on risk because there is the highest potential to make money and no one gets anywhere playing it safe all the time, which is the same philosophy as John Slazas. I tend to invest in shorter term stocks that are volatile and are traded daily because of the adrenaline that you feel from the face paced trading, but for this project I was asked to invest long term with 3 different time frames, 1 year, 5 years, and 25 years. I had to research more long term stocks and balance the risks so that I wasn’t completely invested in high risk companies.
For my first objective, one year, I decided to take a more risky approach because it wasn’t my life savings and I could recover from any of the loses. I decided to invest 10% of my portfolio (1,500$) in SunEdison Inc, SUNE, because it is one of the major providers of solar energy and just recently signed a deal with India allowing them to operate there. They also recently released their earnings and they were not too promising so the market pulled back and lowered the price to around 5 dollars a share from 8 a couple weeks ago. However, the reason for their low earnings is because they recently have been borrowing a lot of money to expand and create a stable revenue stream. They seem to have gotten that opportunity in India. This is my riskiest stock because there is no guarantee in their success and they recently haven’t been doing well, however, it offers the highest return if successful. The next stock that I put money into was Apple, APPL, to manage my risk with a more stable stock. Apple is a super power in the technology world and continues to maintain a grip on the American cell phone and computer markets. 2015 was also Apple’s most successful year ever according to their earnings reports.I would put 25% of my portfolio in Apple. Apple is a safe investment with low return. Activision Blizzard Inc, ATVI, is the third company I would invest in because they recently announced three upcoming games/expansion releases and a movie that is expected to be a huge hit. While their main cash cow, World of Warcraft, has been losing players, their other games have increased in popularity and are played around the world. I believe they will continue to increase in value for at least another year as these new games come out. The past year their stock has been at an all time high. This is a moderate risk investment as the games could fail or the movie be a bust and it would be a huge hit to their stock. I would invest 15% in their company. The rest of the money I had would be put into a bank collecting interest, the safest way to earn money.
Name
|
Price of Stock
|
Stocks Owned
|
Percent of Portfolio
|
Risk
|
SUNE
|
4.92
|
305
|
10%
|
High
|
APPL
|
112.34
|
34
|
27%
|
Low
|
ATVI
|
34.59
|
66
|
15%
|
Medium
|
Bank
|
N/A
|
N/A
|
48%
|
Extremely low
|
For the second time frame, 5 years, I decided to take on an equal amount of risk as the first time frame because it still is only 5 years, which means the money can be earned back and isn’t everything I have saved. I kept the same stocks as the first time frame except changed some amounts based on balancing my risk and incorporated more stocks into my portfolio. I decided to add Allergan, AGN, to my portfolio at 10% because it is on the verge of making a deal to merge with another pharmaceutical company and is also getting of its drugs FDA approved within the next month. However, if the merger falls through or the approval then the stock price will drop a bit. This is a medium risk stock as it has historically only varied by 10-20$ for a stock that is valued at 298$ that is great. The next stock I decided to add to my portfolio was Smith & Wesson Holding Corp, SWHC, a gun company that produces a variety of different firearms. They recently have received more deals from law enforcement than usual and are expected to receive the Armies pistol contract. Their stock in the past year has risen 82.7% and is expected to continue to rise. This investment is a moderate risk because if they lose the Army deal their stock price will drop a few dollars. The stock currently is valued at 17.14$ and I would have it make up 10% of my portfolio. The last thing I would buy would be an ounce of gold as it is a commodity that throughout time has been valuable and considered the most valuable metal. The price of gold normally follows the market as a whole and rises and dips with it, making it a safe investment. One ounce of gold would be 7.2% of my portfolio.
Name
|
Stock Price
|
Stocks Owned
|
% of Portfolio
|
Risk
|
SUNE
|
4.92
|
457
|
15%
|
High
|
APPL
|
112.34
|
20
|
15%
|
Low
|
ATVI
|
34.59
|
44
|
10%
|
Medium
|
SWHC
|
17.14$
|
88
|
10%
|
Medium
|
AGN
|
300.20$
|
5
|
10%
|
High
|
AU
|
1,084.45$
|
1
|
7.2%
|
Low
|
Bank
|
N/A
|
N/A
|
32.8%
|
Low
|
For the last time frame I would use most of the same companies except Activision Blizzard Inc because I believe that in 25 years we will have a new superpower in the gaming industry and ATVI won’t be as huge. I also believe Apple will not do fantastic in the long term because they are not innovative anymore and are bound to be eclipsed. This will make Apple a higher risk for the long term because there still is a chance that they change course and once again become an innovative giant. I would invest in Google as my new safe bet because over the past few years it has been collecting more and more companies so that it can offer any service in the world. I believe that they will create their own operating system that is parallel if not better than any out there currently because they will be able to offer the best of everything. I would put 15% into google and bring down my Apple investment to 10% and my ATVI investment to 5%. I would also add a company called Oculus Innovative Sciences Inc. because they are heading the development of public virtual reality, which I believe to be the next craze after video gaming. The reason for this is because as time has gone on all entertainment has become more advanced and the user has gained more control of the way they receive this entertainment. It used to be music where we could listen, then TV where we could watch, then TV turned into a mass collection of channels and allowed us to control what we watched, and then video games where we controlled what the entertainment does.With virtual reality you gain complete control of the entertainment and can do whatever you want with it. I would invest 5% into this company as they could fail and another company takes their place but currently they are heading the virtual reality world. This is a high risk investment.
Name
|
Stock Price
|
Stocks Owned
|
% of Portfolio
|
Risk
|
SUNE
|
4.92
|
457
|
15%
|
High
|
APPL
|
112.34
|
14
|
10%
|
Low
|
ATVI
|
34.59
|
22
|
5%
|
Medium
|
SWHC
|
17.14$
|
88
|
10%
|
Medium
|
AGN
|
300.20$
|
5
|
10%
|
High
|
AU
|
1,084.45$
|
1
|
7.2%
|
Low
|
GOOG
|
717
|
3
|
15%
|
Low
|
OCLS
|
1.1$
|
682
|
5%
|
high
|
Bank
|
N/A
|
N/A
|
22.8%
|
Low
|
Works Cited
"Apple - Press Info - Apple Reports Record Fourth Quarter Results." Apple - Press Info - Apple Reports Record Fourth Quarter Results. Apple, 27 Oct. 2015. Web. 12 Nov. 2015.
"Gold Spot Prices Today – Live Gold Charts." JM Bullion. Jm Bullion, 12 Nov. 2015. Web. 12 Nov. 2015.
"Oculus Innovative Sciences Inc." OCLS Stock Quote. Market Watch. Web. 12 Nov. 2015.
"Smith & Wesson Holding Corp - SWHC (NASDAQ-GS)." SWHC Stock Quote. Motifinvesting. Web. 12 Nov. 2015.
"SunEdison: The Market Has Got The Earnings Wrong." Seeking Alpha. SunEdison, 12 Nov. 2015. Web. 12 Nov. 2015.
"TheStreet Rating: A (Buy) Get the ATVI Report Activision Blizzard Inc (ATVI)." TheStreet. Web. 15 Nov. 2015.