Report on Portfolio Project Alejandro A. Chiossone FIN315: Principles of Investment Dr. Kiseok Nam Sawyer School of Business Suffolk University December 21, 2016
REPORT ON PORTFOLIO PAPER Abstract The purpose of this project is for the student to get a broad understanding on the stock market and the investment world. As we have learned in class, the success in investment does not come with extensive knowledge or with big preparation, it has a lot to do with your behavior and the way you can interpret firm-specific factors, macroeconomic elements and speculative expectation in the market. The project was a real time simulation experience on how the market reacts to different factors throughout the day. It was a great tool for the student to see how difficult it is to make money in the stock market nowadays. You need to have a strong gut at the time to invest, not be scared when the market goes down, and to buy and hold if you really believe in the stock you want to invest. This project helped me to have a better understanding on how the stock market performs, and how to speculate depending on the weekly news on macroeconomic issues in order to try to make a decent amount of profit. 2
REPORT ON PORTFOLIO PAPER Report on Portfolio Paper Throughout the time period of our Portfolio Project, we had big news that caught everyone by surprise: the election of Donald Trump as the President of the United States. This happened on a Tuesday night, and on Wednesday the market was going up like crazy, reaching an all-time high. People who invest in industries such as construction, shipping, infrastructure, and financial services made a terrific profit after the presidential election. This happened because of what people expect Trump to do when in Office. The infrastructure industry grew substantially because one of Trump’s proposed plans to strengthen the American economy is by developing and creating opportunities around the country. The financial services industry strengthened because all of his proposed projects will need to be financed by major institutions such as Bank of America, Morgan Stanley, etc. High and Low P/E stocks are being drafted from the company’s P/E ratio. Theoretically, a stock's P/E tells us how much investors are willing to pay per dollar of earnings. The P/E is the measure of a company's past performance, but it also takes into account market expectations for a company's growth. We need to keep in mind that stock prices reflect what investors think a company will be worth. Future growth is already accounted for in the stock price. As a result, a better way of interpreting the P/E ratio is as a reflection of the market's optimism concerning a company's growth prospects. If a company has a high P/E ratio, it means that the market is expecting big things over the next months or years from this company. A company with a high P/E ratio will have to live up to the high rating by substantially increasing its earnings, or the stock price will need to drop. On the other hand, companies with low P/E ratio are those defined as high-growth companies that had to solidify their reputations and turn into blue chips.
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