Pick stocks and track them for two months to see how the stock market changes over time. Your paper will be comprised of 3 sections: an explanation of the investments you made and the process involved, a discussion section, and a question section. Please use headings to help organize your paper.
- Section 1: Explanation of your experience
- In your write-up, take me through your thought process. Describe the events involved in picking and tracking your stocks. What did you base your decisions on? How did it turn out? Show me the supporting information, in a table or chart. Duplicate the example process below, so you know where the numbers for every calculation are coming from.
- Reference the stock/investing articles in the reading packet (Section 2). Reference the material there when you discuss your process in this section.
- As you report your numbers, if it makes sense to you, it will make sense to me.
- Section 2: Discussion
- Discuss relevant issues regarding stock market investing.
- Reference ideas were presented in the class lectures and in the class readings.
- Section 3: Thought Questions
- Answer the following questions (with headings). Use the question itself as the heading.
- How, if at all, have your opinions of investing in the stock market changed throughout this process?
- What impact will good stock market investing have on your future?
- What impact will good stock market investing have on your immediate family?
- What impact will good stock market investing, in general, have on society? In other words, if more Americans had a successful experience investing in the stock market, how would that impact the economy?
Project Grading Details:
- Your grade will be based on (see rubric below)
- Accurate completion of the stock market investing and clarity of the explanation
- A thorough discussion of relevant issues to stock market investing
- Insightful answers to required thought questions
- Ability to follow all of the directions and include all of the relevant material
- Grammar = complete sentences, proper punctuation, no misspelled words, etc.
- Projects should be typed, double spaced, in 12-point font with standard 1 inch margins.
- Length = 7 pages, typed, double-spaced; and then attach any relevant supporting materials.
- Do not use a cover sheet.
Mock Stock Market Investing
Invest a fictitious $10,000 in the stock market.
- You may “purchase” as many or as few investments as you like.
- You may “purchase” individual companies or mutual funds (as long as the mutual funds are STOCK BASED – no bond funds are allowed).
- Ignore the issues of fees and taxation to keep the example simple (maybe simplistic is a better word, but it will work).
- Spend as much of your $10,000 as possible.
- There are a few ways to determine how to split up your money.
- You may want to invest in one company. For example, let’s say that stock is currently trading at $54.86 a share. You can purchase (10000/54.86) = 182 shares, which will cost you $9,984.52. You have $15.48 left over. You can try to find an inexpensive stock and purchase another share or two, or you can call it good.
- You may want to split your portfolio into different sectors, based on a pre-set percentage. For example, you want 25% in technology stocks, 25% in banking and finance stocks, 25% in health care stocks, and 25% in utilities/energy stocks (I’m not suggesting you use these percentages or those categories – I just made them up for the purpose of illustration). You would find one or more technology stocks and purchase $2500 worth, and $2500 worth of banking/finance, etc.
- You may just pick some stocks that you are interested in tracking, and pick any amount to invest.
- You may pick your own stocks based on companies you like, you may ask friends and relatives for recommendations, or you can follow an expert’s advice. Whatever you do, get cracking!
- Look in the newspaper or online to find the current price. Every week, on the same day and at approximately the same time, make a note of the current price of your stocks. Track your stocks for a minimum of 8 weeks.
- Organize your information into a chart or table. You may follow my example chart or come up with a better one.
- You may buy and sell as you much or as little as you want.
- Every week, calculate your capital gain/loss on each individual investment, as well as your total portfolio capital gain/loss as a percentage, using the overall percentage change formula. See example chart below.
- You will be calculating the week to week change. For example, in week 3, you will be calculating the change from week 2 to week 3. This is probably easiest to accomplish by setting up formulas in Excel. Of course, you can also do it by hand and create a table in Word.
- At the end of the tracking period, calculate your overall gain/loss by calculating the change from week 1 to week 8.
Example of Mock Stocks:
- You decide to purchase 3 stocks, ABC, DEF, and GHI. You go online and look at their current trading price. You start a chart to organize your information. You note that you have $4.30 left over in cash. To get the total value, simply multiply the price by the number of shares.
- Example: You purchase 243 shares of ABC stock for $12.43 a share. This costs you (12.43)(243) = $3020.49.
|Stock||Original Price||# of Shares||Total Value|
|Total Portfolio Value:||$10,000.00|
- Every week you will track your stocks and then calculate the capital gain/loss of each stock, as well as your total portfolio as a whole, reported as a percentage. Please note the example of 3 weeks below. Continue on in this manner for a minimum of 8 weeks.
- Example: For ABC stock (using Overall Percentage Change formula), in Week 2 you earned a (13.67-12.43)/12.43 = 9.98% rate of return. In Week 3, you lost money, and had a (13.28-13.67)/13.67 = -2.85% return.
- For the Total Portfolio Value, in Week 2, use (10888.12 – 10000)/(10000) = 8.88%
|Stock||Original Price||# of Shares||Week 2||Week 3|
|Cash||$ 4.30||$ 4.30||$ 4.30|
|Total Portfolio Value:||$10,000||$10,888.12||8.88%||$12,410.32||13.98%|
- After 8 weeks, calculate all final Capital Gains/Losses, for each individual stock and for your entire portfolio. In my example, I will just add one more column and only do 3 weeks total.
- Example: ABC in the Total column, use the price from the last week (Week 8 or more for you), and the original price. In my example, those numbers are (13.28-12.43)/12.43 = 6.84%.
- For the Total Portfolio Value, use the value from the last week (Week 8 or more for you) and the original value. In my example, those numbers are (12410.32 – 10000)/(10000) = 24.10%
|Stock||Original Price||# of Shares||Week 2||Week 3||Total Gain/Loss|
|Cash||$ 4.30||$ 4.30||$ 4.30|
|Total Portfolio Value:||$10,000||$10,888.12||8.88%||$12,410.32||13.98%||24.10%|
- Please note: In the chart, positive returns should be left alone – so they should be just black, normal font. Negative returns should be italicized. Or, you may turn the numbers red if you have a color printer.