Name: Yanan Chen
Jeff Doane Group Name: powerful microcosm
Group number: 2 Course: portfolio theory and valuation FINACE 4560-001
Date: 12/02/2013
Catalogue
Macro-economic analysis
APPLE INC. (AAPL)
BARCLAYS PLC (BCS)
CATERPILLAR INC. (CAT)
E*TRADE FINANCIAL CORPORATION (ETFC)
PANDORA MEDIA INC. (P)
FORD MOTOR CO. (F)
J.C. PENNEY COMPANY INC. (JCP)
COMPANHIA SIDERURGICA NACIONAL (SID)
Introduction
News and event
Technology analysis
Conclusion
Macro-economic analysis
Under the background of global economic recovery is slow, America’s economy presents the obvious signs of stabilization. GDP growth is slowing, more confidence in economic recovery, rapid growth in industrial production and consumption continuing to steady and rapid growth. From The Wall Street Journal, The Dow Jones index maintain growth for 8 weeks, and this week rose from 22 points to 16086.41, amount of increase at 0.1%. Standard & poor's 500 index rose 1 point, amount of index at 0.1%, to 1805.81, slightly lower than on Wednesday at the highest closing price of 1807.23. The total growth has arrived 27% of the index of the year. The NASDAQ composite index climbed 68 points this week, to 4059.89 points, rose 1.7% of index.
This project began on September 11th and concluded on November 21st. Our group accepted the portfolio task to take $100,000 and receive higher return to investors. My partner has been to buy real stocks for long time. Based on lots of analysis and different factors, we chose some good stocks we think and trade them. Actually, through analyzing different factors that affected the short term returns and long-term returns, we believed that it will be a choice to keep stocks with long-term returns.
Investment Goal and Objectives
Maximize Long-Term Returns
Minimize Volatility
Why we want to invest in stock-there are lots of answer. For individual, the most fundamental purpose is to get more money by stock trading price difference. However, there still some group behavior by buying a lot of stock in an enterprise to achieve the purpose of control of the enterprise. From EBO(Edwards-Bell-Ohlson):
The higher and longer of return on equity of equity capital cost rate, the higher the stock's intrinsic value. So one of goals that is to maximize long-term returns. The best way to maximize your long term investment returns is to optimize your buy and hold stock strategy
The main reason for the share price volatility is the supply and demand changes. However, there are still many factors to make the change in supply and demand. Political factors, for example, politics and the government's policy of stock market development at home and abroad, measures, and the formulation of laws, and change.
Economic factors, Fiscal financial factors, company factors, and Marketability factors also have big effective on stock market. All of them are uncertain factor, which we will never know early. Any small change in these factors will cause big impact, which should be immediately noticed.
Benchmark
S&P 500 (SPX)
The S&P 500 is widely regarded as the best single gauge of large cap U.S. equities.
The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.
Trading Strategy
Low P/E
Low P/B
Low PEQ
Dividend Yield
Price-earnings ratio calculated as Market value per share/earnings per share
The normal and suitable P/E is from 10-30
Price to book ratio Calculated as:
P/E ratio a valuation ratio of a company's current share price compared to its per-share earnings. (investopedia) A lower ratio can reflect stocks’ poorer future opportunities or potential, which would also improve future prospects. It is often used in valuing firms or takeover targets current or forecasted earnings. When investors chose lower P/E
