Student/Teacher Permission Form



IDC4U1 - Client Portfolio – Summative Evaluation

(30% of the final mark)

Students, individually, will develop a detailed financial plan for a real client. A client profile will be developed, from a financial perspective, using the Client Portfolio Form. Following the completion of this profile, students will develop an investment portfolio, which must consider the needs and wants of their client.

Please note that this client will remain anonymous to both your classmates and your teacher. Please do not use their real name on any of the documents below. You are not allowed to discuss your clients personal or financial information with anyone else – this is important.

Components of the Client Portfolio - Detailed Analysis

Section 1: Administrative Documents

❑ Financial Securities Evaluation Rubric

Section 2: Client Profile

❑ Summary of Key elements of your Client Profile (max. 2 page/500 words)

❑ Client Portfolio Form (download and complete)

Section 3: Performance Analysis

❑ Weekly Summary Chart of the Portfolio Performance (6 charts)

❑ For Each Holding in the Client Portfolio provide a:

o Profit/Loss Calculation for each holding

o Graph showing price changes for each holding between the time you bought & sold or still holding

o Reason for Buying each holding

o How each holding fits into your Overall Strategy

o Why you sold the holding or why you held on to it

o Do I have a source document for EVERY holding

❑ Provide a list of Resources that you used in this process

For example: newspaper, books, web sites; use APA style (see your student planner).

Section 4: Reflection Report

Reflection of what money management skills you learned from the competition (max. 4 pages/1,000 words including returns, future trends, ratio analysis)

Formatting Rules

All work is to be double-spaced, one sided, 12-point font size, with maximum left side margin of 1.5” with a right, top and bottom margin of 1”.

All sources must be quoted using APA style. See your student planner for more details.

(Image source: stern.nyu.edu/~cliu/research/ticker.gif, April 16, 2007)

Schedule of Events

1. Designing an investment portfolio

2. Developing and implementing an asset mix

3. Monitoring the economy, the markets and the client

4. Adjusting the portfolio and measuring performance

5. Writing a thoughtful reflection

The time frame for this activity is approx. SIX (6) weeks. The portfolio must be completed and submitted on or before: June 4 or 5, 2015 (Depending on day 1 or 2 schedule).

Step #1 Designing an Investment Strategy - Client Portfolio Form (Due: Monday & Tuesday April 27 & 28, 2015)

Interview your client using the Client Survey (attached). Using the information that you gather in in the interview process, you will design an investment strategy. Designing an Investment Strategy will be established by the interview process. Students will develop investment objectives determined from a thorough discussion with their client. Step #1 will include:

• Client Portfolio form – a copy of your survey

• Economic conditions summary – what is going on in the market now?

• Risk and returns – what type of risk is the client willing to undertake – what returns are

they expecting?

• Time horizon (including liquidity issues) - when do they need the money? How much

time until they retire?

• Major investment objectives (what are they saving/planning for?) – at least 3

mentioned

• Taxation (RRSP, RESP, RDSP, TFSA?) – does the client hold any of these types of

investments? Are there any taxation issues to be aware of?

• Strategy/philosophy of investing

Step #2 Developing and Implementing an Asset Mix & Detailed Analysis of a Company (Due: May 4 & 5, 2015)

• Based on a combination of the details in Step #1 and the client’s preferred Asset Mix, pick four investments and begin tracking performance. (These can be mutual funds, bonds, stocks, ETFs, etc)

• Portfolio Selection - Explain your rationale for the strategy used and justification for asset allocation techniques. In other words, why did you invest their money this way?

Step #3 Monitoring the Economy, the Markets and the Client (Due: May 14 & 15, 2015)

• The Market: Weekly summary of stock performance using an excel spreadsheet.

• The Economy: Description of major economic events and their impact on the market.

• The Client: Changes in the investor’s goals, financial position and preferences.

Step #4 Adjusting the portfolio and measuring performance (Due: May 21 & 22, 2015)

• All weekly graphs of the Client Portfolio and write-up of each holding

• Final Summary Chart of the Portfolio Performance

• Comparison between investment portfolio and market index

Step #5: Reflection (Due: May 28 & 29, 2015)

Comment on what happened as opposed to what you predicted would happen based on your initial economic forecasts. Write a reflection of what you have learned from this activity, including what impact this experience has had on you. In your reflection you should:

1. Describe the strategy you followed in constructing your Client Portfolio.

2. Did you change the strategy during the competition?

3. What things did you not anticipate while developing your strategy?

4. Were there changes to your client’s opinions along the way?

5. Has your understanding of investing changed after competing in the competition? Will it influence your behaviour in future related to your finances? How?

6. Would you consider a career in the investment industry? Why or why not?

7. Overall, how was your investment experience?

Client Portfolio – Assignment Guidelines

There are two main parts to this project:

1) The creation of a client profile.

2) The development of an investment portfolio tailored to the specific needs of the client.

The portfolio must respect the client’s tolerance for risk while meeting the client’s short, medium and long-term goals. At the beginning of the project, you will outline your investment strategy developed as a result of your client’s profile.

Where do I find holdings for my portfolio?

Only investments listed in the following markets may be used.

• The Toronto Stock Exchange

• The Canadian Mutual Funds listing as per the Financial Post/Globe and Mail

• Canadian Bonds listing as per the Financial Post/Globe and Mail

• The Canadian Derivatives Exchange (Montreal Exchange for options/futures)

When can I run this portfolio?

The portfolio must be run from April 24, 2015 through to May 22, 2015. Make sure you note your securities prices as of the Friday (close) of each week.

What are the Trading Rules? What can be traded/held in the Competition?

1. Only items found in the markets listed above may be used.

2. Rights, Warrants, Units, Debentures and stocks traded in U.S. are not included.

3. A source document must be produced to validate your trade. A source document that states the holding cost (e.g. newspaper clipping or internet printout stating the value of the stock on the date of the transaction), also record the commission fee and type of transaction. A source document must be included for every buy and every sell and document the commission fee. Failure to include a source documents for every transaction will result in a mark deduction.

Commission Fees:

• Stocks/ETFs less than $1 per share: $20 + $.005 per share

• Stocks/ETFs equal to or more than $1, less than or equal to $3: $20 + $.01 per share

• Stocks/ETFs more than $3, less than or equal to $10: $20 + $.02 per share

• Stocks/ETFs more than $10: $20 plus $.03 per share

• Mutual funds: $20 processing charge to buy the mutual fund; no fee is charged to sell the mutual funds

• Bonds: $20 to buy or sell a bond

4. Profit/loss calculation for each holding.

5. Produce a graph showing price changes for each holding between the time you bought and sold.

6. Discuss the reason for buying each holding.

7. Explain how this holding fits into your overall strategy.

8. Explain why you sold this holding or why you held onto it.

9. Provide an in-depth report of approximately 1000 words (4 pages) to be written on one holding in the portfolio.

10. Five weekly charts showing the summary performance of your investment portfolio.

You must make sure you do the following…

1. The participant must complete and submit a two page summary of his or hers client’s profile including an outline of short, medium and long term goals. The student must comment on the risk/reward tolerance levels of the client and the portfolio selected MUST reflect this.

2. Submit a completed Client Portfolio Form (available on the school’s network). Use “Not Applicable” (N/A) in those areas that do apply to the client.

3. A summary and analysis of each holding.

4. A detailed analysis of one holding (max. 4 pages).

5. The size and nature of the portfolio must realistically reflect the circumstances of the client. For example, a client who is a 16 year old student who has worked part time may only have three or four thousand dollars in savings to invest.

6. Profit/loss Summary Chart and analysis (eg. spreadsheet).

7. Conclusion - what you learned from this simulation (reflection).

8. Appendices - Source Documents establishing the buying and selling of each holding, price charts, articles pertaining to the companies you invested in etc.

It is important to remember that having the highest portfolio value does not necessarily mean you’ll get the highest mark.

Suggested Table of Contents – Client Portfolio Project

1. Client Profile Summary

1. Client Demographics

2. Client Personality Type

2. Investment Goals/Strategy

1. Investment Plan [including dollar amount]

2. Evidence of calculations to meet goals set out in the Investment Plan

3. Asset Allocation Model [Income/Growth]

4. Investment Decisions

1. Choices and Reasons for Investments

2. How Client’s Needs are Met

5. Corporate Report and Reflection

1. Returns

2. Future Trends

3. Ratio Analysis – [Technical Analysis of One Company]

4. Reflection

6. Appendix A: Client Profile

7. Appendix B: Portfolio Records and Monitoring

1. Notes and Charts

1. Investment A

1. Profit/Loss

2. Price/Time

2. Investment B

1. Profit/Loss

2. Price/Time

3. Investment C

1. Profit/Loss

2. Price/Time

4. Investment D

1. Profit/Loss

2. Price/Time

2. Future Recommendations

3. List of Sources/Evidence of Trades

8. Appendix C: Portfolio Tracking

1. Investment A

2. Investment B

3. Investment C

4. Investment D

Useful Financial Websites

|Investor Education |

|Investor Education Fund | |investorED.ca |

|Equity News/Views/Quotes |

|Globe Investor | | |

|Stock Group | | |

|Smart Money | | |

|Bloomberg | | |

| | | |

|The Motley Fool | | |

|Equity Research Tools |

|Sedar | | |

|Raging Bull | | |

|Zacks Investment Research | | |

|SEC | | |

|Hoover's Online | | |

| | | |

|Company Sleuth | | |

|BigCharts | | |

|Whisper Numbers | | |

|IPO Central | | |

| | | |

|Equity Research Center | | |

| |

|Canadian Bonds, Mutual Funds & Options |

|The Bond Market | | |

|Montreal Exchange | | |

| |

|News Services |

|Canada NewsWire | |w.ca |

|Dow Jones | | |

| |

|Magazines |

|Canadian Business | | |

|MoneySense Magazine | | |

|Business Week | | |

|Forbes Magazine | | |

|Fortune | | |

| |

|General |

|Bank of Canada | |bank-banque-canada.ca |

|Toronto Stock Exchange | | |

|Federal Reserve Board | |ny. |

[Don’t print…this is available at the Investor Ed. Website]

Samples of Graphs

Charts may be done using a spreadsheet, the charts on the previous pages were done using Excel, or you may use a Web Site to plot the graph for you. You must indicate the date you purchased the stock and date you sold it on the graph, some web sites like allow you to do this, and some such as canada. do not.

Sample #1: Profit and Loss Summary

[pic]

Sample #2: ATI Technologies

[pic]

The graph above of ATI Technologies was produced by "BigCharts"

ATI TECHNOLOGIES

Bought: March 10, 19XX

1,000 shares @ $ 9.00 = $ 9,000 + 1% = $ 9,090

Sold: April 7, 19XX

1,000 shares @ $12.00 = $12,000 - 1% = $11,880

Profit: $2,790

We had been following ATI for about 2 weeks and noticed an article in the paper predicting much higher profits. ATI has just signed a contract with Dell and Compaq to supply their 3D Rage Pro graphic cards to these computer manufacturers. ATI is fast becoming the dominant supplier of graphics cards in the world. It is expected to have sales of 1 billion dollars this fiscal year. The 3D chip will revolutionize computer game playing. ATI is located near the school at Leslie and Hwy. 407, so we thought supporting a local company would be an appropriate thing to do. ATI fitted in with our original strategy of investing in high growth stocks with proven track records and established markets.

Although ATI did rise in price as we predicted the increase was modest, and the profit generated was not enough to win the competition, reluctantly we decided to sell and use the proceeds on a more volatile stock in a last ditch effort to catch the top team in Canada.

 

Sample #3: ATI Technologies

[pic]

“Imoney” produced this graph of ATI Technologies.

Advantage: you can plot the exact dates you bought and sold.

Thank you to by Marney Pollock, Thornlea Secondary School for making these samples available on the internet of her student’s work.

Samples of Holding Analysis

Sample #4: Pure Gold

PURE GOLD

Bought: March 20, 20XX

50,000 shares @ $1.30 = $65,000 + 1% = $65,650

Sold: May 4, 19XX

50,000 shares @ $1.25 = $62,500 - 1% = $61,875

Loss: $3,775

One of our strategies was to invest in penny mining stocks, we realize that these companies represent a big risk, but on the other hand they can generate a big reward. Just look at Bre-X Minerals that went from $2.00 to $200.00 to $0.00! Could Pure Gold be the next big thing or the next big fraud? The low price meant we could buy very high volumes of stock and only a small fluctuation in price would mean a large profit or loss. We read in the Globe and Mail that most experts are predicting that the world price of gold will increase in the next few months as inflation and interest rates rise. However, our teacher pointed out that Pure Gold doesn’t really have any gold, it just explores for gold and it either finds some or gets bought out by a large mining company like Barrick or Placer Dome, or it finds nothing. Perhaps this was a desperation move, but our goal was to be the first place team in Canada.

Unfortunately our gamble did not pay off, we kept this stock until the end of the competition, and took a substantial loss. It appears that our analysis of Pure Gold was overly optimistic, and our timing was bad, having bought the stock at its highest price in weeks.

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$ in

100,000

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STOCKS

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