-First Place



FIN320 Spring 2018StockTrak Investment SimulationIn order to apply concepts learned in class and gain practical experience, your group have just been hired to create a new mutual fund. The objective of this mutual fund is to outperform the S&P 500. The mutual fund has an initial balance of $1,000,000 and margin is available. As manager of the mutual fund, you can buy or short stocks, bonds, mutual funds, and ETFs. The groups will create and manage a virtual investment portfolio. To do this, you will use StockTrak, a portfolio simulation broker and a virtual portfolio. Stock-Trak allows you to formulate trading strategies, conduct research, select securities, execute trades, and track the performance of your account. StockTrak helps you learn about the ‘real-life’ market mechanism, including the terms and terminology of trade execution, the characteristics and various asset classes (stocks, bonds, options, etc.), and the general market environment. Concentrate on the differences between assets (e.g., risk/return characteristics, trading rules, capital requirements) and take advantage of the opportunity to learn about order submission, transaction costs, margin requirements, etc., while managing the money as it would be your own.Your username should be in the following format: F320_ X (Your fund name),, where ‘X’ is your group number. Each group should email me (MyU) their members and I will assign them a number.Registration must be completed by Sundy (18/2/2018). Trading will start on Monday (19/2/2018). I highly encourage you to sit down with your team and start planning and executing. The funds will automatically be liquidated on last day of classes, so you only have a few weeks to tradeYour final grade will be based on the quality of your analysis, and on your risk-adjusted total return. You are entitled to the following bonus points-First Place25 Points added to the project -Out-perform the S&P 50010 Points added to the project The above points will be added to the written portion of the project. The bonus points will be awarded based on your ranking at the end of the game. TeamYour team should be compromised of 5 (4 to 5) students. The decision-making and management of the portfolio should be joint decisions. The group (through voting) will decide whether or not to buy/sell a stock in their portfolio. They must document all of their actions in an Excel sheet. Each position you take in an asset must be a maximum of 25% of your assets.Each analyst will be responsible for 2 sectors. He/she will provide an analysis of the industry, i.e., degree of competition, growth of industry-wide sales, profitability of competitors, life cycle stage of the industry, Porter’s five factors, and P/E ratios of competing companies. Then choose 3 stocks from each industry (total of 6 stocks per student) to analyze. They will begin by a brief description of the company, its products and services, recent events that are relevant to the valuation of the company, and recent trends in sales and earnings. Valuation of each company must be done using DCF method (DDM or FCFF) and relative valuation using multiples such as P/E, P/BV, P/Sales or any other appropriate multiple. Make sure to include financial analysis (ratios) and analysis of Investment Risks (Business, Financial, Systematic, Financial Statements)You should try to assign different tasks for the various members. For example, the responsibility of trading could be assigned to one member.Group leader/organizer should be responsible to communicate with all team members, and follow the due dates. In addition, he/she should make sure to follow and complete all the trading rules.The group editor will be responsible for the group report (writing expert)Media & PR manger will be responsible for the group presentation ( PowerPoint expert)Trading manager: will be responsible for execution trades and tracking of portfolio performance. In addition, he/she should be responsible for the trade journal that enables them to fully annotate their trades. You can record the rational and expectation as you trade—which CANNOT change their journal, only append it. (Excel expert)The economist of your team should be responsible for an analysis of current macro-economic and that are relevant. You might consider discussing current monetary policy, interest rates, inflation, business cycle conditions, GDP growth, currency exchange rate and any other macroeconomic subject that is relevant to value of the companies you choose. In addition, he/she will provide an analysis of stock market conditions including recent returns on stock market indexes and average valuation ratios such as P/E ratios of stock market indexes.Peer EvaluationAt the end of the semester, you will confidentially grade your fellow group members. Their grades should be based on the following criteria:Did they do their share of the work throughout the semester?Did the group member attend all group meetings?Was the member prepared?Did they share in the presentation responsibilities?How do you get started?Registration: To register your account, go to HYPERLINK "" team should have one account. You can register online with a credit card. You need to register your group by the next class. Your username should be in the following format: F320_ X (Your fund name), where ‘X’ is your group number. Choose a name for your fund that match you investment style and strategy.Portfolio Management RulesYour first step is to consider all of the potential trading strategies. For example, the dogs of the Dow, a contrarian strategy, a momentum strategy, a low p/e ratio strategy, a low book value strategy or any other strategy. You can select multiple strategies for your mutual fund. Make sure to:Outline your strategy and justify why you selected it.Provide historical evidence of the performance of your strategy.Provide evidence showing that mutual funds or portfolio managers use this strategy. Write an investment policy statement for the type of investor who should invest in your mutual fund.Make sure you familiarize yourself with StockTrak’s trading rules: Develop an asset allocation. Given where we are in the business cycle, would you be under or overweight. Make sure to Invest for a diversified portfolio, instead of a series of trades with no rhyme or reason. Think of how will you identify undervalued stocks? What financial ratios will you use to screen stocks? Each group must use the Sharpe, Treynor, and Jensen’s alpha performance measure to evaluate their performance. For purposes of comparison, the S&P500 will be used as a benchmark portfolio.Your report should be professionally written, and leave little doubt that you clearly understand your trading activity. Details will come later. During the game, each group must:Watch the videos which are available in Stock Trak by Monday(19/2/2018).Use different order types at least once during the trading competition (Limit order, limit sell, Stop orders)Short a US stock at least once during the trading simulation.Trade at least two mutual funds (1 closed-end, 1 open-end) and one ETF for each member (student)Make at least one trade per weekPerform a minimum of 20 trades during the semester.During the project’s time StockTrak allows your team to perform up to 200 trades. You can trade in stocks, bonds, ETF and mutual funds. Make sure you understand quite well the instrument you are buying, especially options.You will earn 3% on your cash position and be charged interest of 8% for margin balances. You can also trade on margin and short sell. Cash must not exceed 20% of your portfolio at any time. We want you invested, not sitting on the sidelines.Trade-Log (trade journal): Keep a record of the rationale for each trade decision that you make during the simulation.There is no maximum on the amount of position you can take in any single asset.It is very important to remain informed regarding the current economic climate and political events occurring in the world and global marketplace. One very effective method is to watch CNBC and Bloomberg at market open and close, to read/sign up for web based ‘market-alert’ reports, and to browse relevant web sites and print media for information regarding economic/political news.At the end of the semester, each group is going to present their results to the class.DeadlinesYou should adhere to the following deadlines. Any group who misses a deadline will start losing 2 points per day of delay.Registration deadline18/2/2018Start Trading19/2/2018GradeThis assignment is worth 25 points of your total grades. There will be various sub-assignments throughout the semester that will be based on your trading portfolio. While the emphasis for the project is on your education and not on portfolio return, to discourage groups from taking excessive risks, the worst performing group will get 10 points off and the best performing group will receive 25 points as bonus credit. If you achieve a positive risk-adjusted return, you will also get extra credits. Performance is measured on a risk-adjusted basis.The points described above should serve as guidelines. Your actions and decisions should be tied to what we do and discuss in class (e.g. industry analysis, valuation methods, market efficiency, financial ratios…etc.). A significant chunk of your grade depends on how you connect your class knowledge to your investment decisions and portfolio.Sources of InformationYahoo Finance: finance.CNBC: Street Journal: New York Times: Investopedia: MorningStar: Financial Visualizations: ValueLine: street Alpha S&P 500 Schwab ETFsTickerNameXLYConsumer Discretionary Select Sector SPDRXLPConsumer Staples Select Sector SPDRXLEEnergy Select Sector SPDRXLFFinancial Select Sector SPDRXLVHealth Care Select Sector SPDRXLIIndustrial Select Sector SPDRXLBMaterials Select Sector SPDRXLKTechnology Select Sector SPDRXTLSPDR S&P Telecom ETFXLUUtilities Select Sector SPDR ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download