Analysis of Stock Market Investment Strategies

ProjectNumber:0903

AnalysisofStockMarketInvestmentStrategies

AnInteractiveQualifyingProjectReportSubmittedtothe Facultyof

WORCESTERPOLYTECHNICINSTITUTE inpartialfulfillmentoftherequirementsforthe

DegreeofBachelorofScience by

GrahamPentheny

ComputerScience InteractiveMediaandGameDevelopment

August2009

ApprovedbyProfessorDalinTang,ProjectAdvisor

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TableofContents

I.Acknowledgements...................................................................................................4

II.Abstract.....................................................................................................................5

III.ListofFigures..........................................................................................................6

IV.ListofTables............................................................................................................8

1.Introduction...........................................................................................................10

1.1Goals................................................................................................................10

1.2HistoryoftheStockMarket...........................................................................10

1.3ProsandConsofFinancialInvestment........................................................11

2.FinancialInvestmentOpportunities..................................................................13

2.1Stocks..............................................................................................................13

2.2Bonds..............................................................................................................14

2.3CertificatesofDeposit...................................................................................15

2.4MutualFunds.................................................................................................16

3.StockMarketTradingStrategies.........................................................................17

3.1DayTrading.....................................................................................................17

3.2SwingTrading................................................................................................18

4.SimulatedInvestmentsandTheirResults.........................................................19

4.1GoalsandStrategies.......................................................................................19

4.2CompanyProfiles...........................................................................................19

4.2.1AppleInc.........................................................................................19

4.2.2MicrosoftCorp................................................................................20

4.2.3RaytheonCompany.........................................................................22

4.2.4GoogleInc........................................................................................23

4.2.5ElectronicArtsInc..........................................................................24

4.2.6NVIDIACorp...................................................................................25

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4.2.7IntelCorp........................................................................................26

4.2.8AdvancedMicroDevices,Inc.........................................................27

4.2.9Yahoo!Inc........................................................................................28

4.3Simulation1:SwingTrading.........................................................................29

4.3.1Week1.............................................................................................29

4.3.2Week2.............................................................................................35

4.3.3Week3.............................................................................................37

4.3.4Week4.............................................................................................39

4.3.5Summary..........................................................................................41

4.4Simulation2:DayTrading.............................................................................42

4.4.1Week1.............................................................................................42

4.4.2Week2.............................................................................................45

4.4.3Week3..............................................................................................48

4.4.4Week4.............................................................................................50

4.4.5Summary...........................................................................................53

5.Conclusion..............................................................................................................55

References...................................................................................................................57

Appendix:CompleteTransactionRecord...............................................................59

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I.Acknowledgements

IwouldliketothankDr.DalinTang,ProfessorofMathematicalSciencesand

Biomedical Engineering, Worcester Polytechnic Institute, for his advisement over

thisproject.Iwouldalsoliketothankmyfriendsandfamilyfortheirsupport.

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II.Abstract

Thisinvestigationfocusedonwhatmakesaninvestorprofitableinthestock

market. A3-week investment simulation was conducted, utilizing day trading and

swingtradingstrategies.Thefactorsthatattributedtothesuccessofthesimulation

were analyzed, and used to increase investing power and ability. The knowledge

gained through this experiment will be used to make intelligent and informed

investmentdecisionsinthefuture.

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