December 10th, 2012
Table of Content Introduction...........2
Executive Summary ............3 Investment Strategy .................4 Overall investment ..........5
Ten Stocks Information
Groupon ........................7 Apple Options .......................9 Rogers Communications. ....................11 Rona .......................................13 Snc-Lavalin....................15 Sunl Life Financial .............17 Nexen (Canadian) ..................20 Ford ........................22 Facebook ...........24 Coca-Cola ......................26
From early September to November 16th, 2012, the Investopedia stock market competition took place. Throughout the two month, students were to use $50000, both USD and CDN, to invest in the American and Canadian stock markets. With this $50000, one must invest in at least 10 different investments, including at least one short, long, and options. The ultimate goal of this competition is to simulate the real world of investment and to first-handedly live through the experience of investment. In the world of investment, one’s main objective is to produce a profit and limit of risks. On top of that, to beat indexes such as TSX, NASDAQ, or NYSE will help ensure a higher chance of losing money. This report includes my personal objectives and goals, how my overall portfolio preformed, the buying rationale behind 10 specific investments, and my overall experience from this competition. Although this report may be long and tedious to read, I hope you enjoy it as much as possible as I guide you on my path of investments.
What is long, short, margin, and options? Long: The process of purchasing securities at the current price and hoping to sell it in the future at a higher price. The form of profit is from both dividend and capital gain. Short: Short selling a stock is the process of selling securities one “borrows” from other investors at the current price, and hoping to repurchase them at a lower price to return to the lending investor. Margin: Buying on margin is a collateral that the holder of a financial instrument has to deposit to cover some or all of the credit risk of their counterparty. The purpose of buying on margin is to leverage one’s profit. This form of investment holds great amount of risks. Option: An option is essentially a contract that grants the buyer the right, not obligation, to buy or sell an underlying asset at a specific price before or on a set date. An option is a type of security, and also a binding contract with strictly defined terms and properties.
Executive Summary The purpose of the stock market simulation is to put money in various types of investments in both American and Canadian stock market using $50 000 in each. We were to make at least one long, short, option and margin investment. Through roughly two month of participating in this simulation, I made a total of 75 transactions using both portfolios. - I invested in a total of 32 companies - Some of the 75 transactions were repeated companies or mistakes
- 18 companies provided me with profit and I suffered a loss from 16 companies
- I gained most profit from my 2 Apple put options - A return on investment of 39.87% - My biggest loss was suffered from Sears Canada - A return on investment of negative 6.67%
- focused on large companies that are known forgiving investors great returns
- My initial goal was to make a great profit in both of my portfolios - 3% in American portfolio and 4% in Canadian portfolio
- In the end, I was handed with 2.74% loss in American portfolio - Only 0.89% profit in my Canadian portfolio
- Was unable to make a margin trade - Site did not allow me even though I spent all my cash and went beyond my buying power
- American portfolio beat NASDAQ by 5% - Canadian portfolio beat TSX by 7%
Investment strategy Goal: My goal for this simulation is to make a profit and minimize losses. More specially, I would like to earn 3% profit on my American portfolio, and earn 4% profit in my Canadian portfolio. This will make my account value $51500 in American and $52000 in Canadian. I also strived to beat NASDAQ, NYSE, and TSX by at least 5% for each.
Strategy My overall portfolio strategy the stock market competition was to invest in large companies that have had positive reviews in the past and had good history of being good investments. I will achieve my target profit on each portfolio by minimizing my losses on each investment by setting stop selling at negative 2% ROI for most investment. I will to not get greedy and sold my stocks when I earned more than 5%. I would make my investments in companies that I have done enough research in to ensure having a good reason to purchase the stocks. Because I am not a big risk taker, I will avoid investing in options and on margin as much as possible because I understand they contain high risks and I am unfamiliar with the investments. I will try to make my investment mostly longing stocks because I understand that shorting a stock bares unlimited loss possibility. I will only short a stock when I am 80% certain that the stock will decrease in price. Overall, my goal was to make profit and reduce losses with individual investments.
Result The results of my investments failed to meet the initial goal I set for my self in both my Canadian and American portfolios. In the Canadian portfolio, I only earned a profit of 0.89%, and in the American portfolio, I was down by 2.74%. At one point of the competition, I was actually making a profit in both of my portfolio, but due to some rash investments, and investment mistakes, the positive return on investment were taken away from me. In my Canadian portfolio, Sears was my biggest loss, while Coca-Cola was the biggest loss in the American portfolio. Overall, throughout the duration of this assignment, I was unable to achieve my goal.
Personal Motto Making little profit is better than making nothing at all 4
Overall investments Company Name Rogers Rona Canadian Tires
Type of Investment Shorting Shorting Longing
Shoppers Drug Mart Shorting Dollarama Longing SNC Lavalin Shorting Air Canada Longing Nexen Shorting Tim Hortons Shorting Sears Canada Longing Yahoo Longing Facebook Longing RIM Longing Nokia Longing Groupon Longing Microsoft Longing Jabil Circuit, Inc. Shorting Coca-‐Cola Longing Pepsi Longing Ford Shorting General Motors Longing HSBC Banks Longing Apple Longing Sunlife Financial Longing Tim Hortons Shorting Apple Put Option CNOOC Longing Nexen Longing Abercrombie Shorting IBM Longing Bank of Montreal Longing
Stock exchange TSX TSX TSX TSX TSX TSX TSX TSX TSX TSX NASDAQ NASDAQ NASDAQ NYSE NASDAQ NASDAQ NYSE NYSE NYSE NYSE NYSE NYSE NASDAQ NYSE NYSE NYSE NYSE NYSE NYSE NYSE
2.33% 1.47% 1.10% 1.43% 3.28% -‐0.93% 7.97% 2.05% 1.78% -‐6.67% 1.75% 3.83% -‐2.46% -‐2.48% 5.37% -‐4.46% 2.55% -‐3.54% -‐2% -‐4.01% 2.25% -‐2% -‐4.65% 3.85% -‐0.45% 39.87% 1.04% 3.89% -‐0.07% 0.38% -‐0.68%
reasons investments 10
i) Groupon ii) Apple Options iii) Rogers Communications iv) Rona v) SNC-Lavalin vi) Sun Life Financial vii) Nexen (Canadian) viii) Ford ix) Facebook x) Coca-Cola
i) Groupon(grpn) Investment: 400 shares of groupon stocks (long) Date bought: 9/17/2012 Price when bought: $4.98 Date sold: 9/20/2012 Price when sold: $5.35 Commission: $19.99
COI= ($4.98 x 400) + $19.99 = $2,011.99 Gain = ($5.35 x 400) - $19.99 = $2,120.01 Profit = $108.02 ROI= +5.37%
What is Groupon? Groupon is an American deal-of-the-day website that provides features discounted gift certificates usable at local or national companies. The company was launched in November 2008, and is headquartered in Chicago, Illinois. In the beginning, the company only marketed for Chicago, but in a few years time, Groupon serves more than 150 markets in North America and 100 markets in Europe, Asia, and South America and has more than 35 million registered users. The CEO Andrew Mason created the concept of Groupon. In April 2010, the company was valued at $1.35 billion. According to a December 2010 report conducted by Groupon’s marketing association and reported in Forbes Magazine and the Wall Street Journal, Groupon was “projecting that the company is on pace to make $1 billion in sales faster than any other business, ever”.  Groupon had an IPO of $28, but the stock have fallen immensely since then to merely $4/share. GRPN is currently traded on NASDAQ.
Why Groupon? On September 15th, when I opened the Toronto Star’s business section, a particular article caught my eyes Groupon CEO deals in growth, looking forward. From my previous knowledge, I knew Groupon was a stock that had a very high IPO but gradually made a dive down the charts. Therefore, the price of each share was relatively low. For this reason also, I realized that there were much room for growth for Groupon. After doing some further research on the company and the security, I found out that Groupon had launched a payment business and entered a crowded field where it will compete with eBay Inc’s PayPal and start-up Square Inc. The new service lets restaurants, salons and spas, retailers and other local businesses accept credit card payments at a lower rate than other providers. By looking at this, I figured that the security had potential being a short term longing investment. As an investor, when the company releases new innovations that benefits the overall productivity, I expect the stocks to rise, as more customers will be interested in the products provided by the company. In addition, since the company released beneficial news, other investors may also expect the stock to fluctuate, therefore resulting in more purchase of the stock, ultimately increasing the price per share. With the launched a payment business, I purchased 400 share of the security. My goal with this investment was to make a 5% profit. My ultimate prediction was a 7% increase for Groupon’s stock, however I figured that holding the stock past 5% is very risky, therefore I set a goal for 5% profit.
1. http://investor.groupon.com 2. http://techcrunch.com/2011/11/04/groupon-ipo-shares-pop-40-on-first-trade-debuts-at-17-8b-market-cap/ 3. http://www.thestar.com/business/article/1255543--groupon-ceo-deals-in-growth-looking-forward 4. http://www.reuters.com/article/2011/11/04/us-groupon-idUSTRE7A352020111104 5. http://www.thestar.com/business/article/1259101--groupon-launches-iphone-credit-card-service
What actually happened I held on to the stock from September 17th to September 20th, for a total of 3 days. From the three days, I achieved my goal of making over 5% in profit as I made a profit of 5.37%. I sold the security at $5.35/share, which is the daily high on September 20th, and it is the highest price per share until October 8th of $5.47. I bought the security at $4.98, which is actually the daily high of both September 17th and 18th, as the stock actually fell to $4.69/ share.  I decided to sell the stock at the time I did because my strategy was to not get greedy and let go of my stock when it hits the price of my expectation. Groupon within the 3 days out preformed NASDAQ by 8.42%, which shows that I made a good investment. Ultimately, I am satisfied with my investment because my research gave me positive result and I achieved my overall goal for this particular investment.
Comparison of Groupon to NASDAQ, Groupon out preformed NASDAQ by 8.42%
Lesson learned From this investment, I learned that I cannot be too attached with an investment or get too greedy to make the most profit. On the day when I sold my stock, I second thought because I was afraid that the share price of Groupon will go up afterwards and I will miss out on the profit. However, because I am not a fan of big risks, I sold my stocks and stayed with the 5.32%. One thing I would have done differently with this investment would be to purchase more shares. Excluding commission, I would have made 7.4%, however due to commission I only made 5.32%. I only purchased around $2000 of this stock, which is less than 4% of my buying power. If I were to investment in around 1000 shares, with an investment of around $5000, I would increase my ROI because the commission value will look less significant. Therefore, in the future, I would purchase greater volume of cheap stocks like Groupon.
1. https://www.google.ca/finance?client=ob&q=NASDAQ:GRPN 2. http://finance.yahoo.com/q?s=grpn&ql=1
ii) Apple options(aapl) Investment: 1 put option of AAPL1316O500 (AAPL 500.00 - Mar 2013) Date bought: 11/13/2012 COI= (24.65x 100) + $21.74 Price when bought: $24.65 = $2486.74 Date sold: 11/16/2012 Gain = ($35.00 x 100) - $21.74 Price when sold: $35.00 = $3478.26 Profit = $991.52 Commission: $21.74 ROI= +39.87%
What is Apple Inc? Apple Inc. is an American multinational electronic corporation established by Steve Jobs, Steve Wozniak, and Ronald Wayne, in 1976 in Cupertino, California. The company is best known for their hardware products such as the Macintosh line of computers, the iPod, the iPhone and the iPad. The company also has many different software such iLife and Itunes. Apple is current world’s third-largest mobile phone maker after Samsung and Nokia. Apple currently has 364 retail stores in thirteen different countries as well as online Apple Store and the iTunes store. Apple holds a dominating force in the electronic industry. The company’s biggest competitors are Nokia, Samsung, and RIM in the phone industry, and Windows operating system in the computer industry. Apple and these companies show significant difference in their operating system, appearance, and functionality in their product. However it is each product’s uniqueness that makes them very popular in the industry. Apple is traded on the NASDAQ.
Why Apple Options? The initial reason I purchased Apple options was because the competition requires to make one options investment. Because I personally dislike risks, I struggled to find an option that I was willing to have the potential to lose all my money and invest in. Afterwards I looked into large popular companies, as they are easier to predict their future stock prices. At the time of my investment, I was very familiar with Apple’s stocks because I have previously lost a great amount of money in investing in the company. Apple has been dropping tremendously shortly after they hit a peak point of $700/share. Ever since then, the stock has dropped over 15%. At the time I purchased the Apple put option, Apple was at $545/share, which was over 22% lower than the company’s peak point. During that time, there was not any news release, or factors that can get Apple back on track, as the recent new iPad Mini failed to drive the stock prices up. For that reason I believed that the company will continue to dive in price. After looking into the numerous put and call options, I decided to purchase a March put option. Since at that time, Apple’s price is already trading in the $500s, I believed that the company has a possibility to dropped below $500 by March of next year at this rate. Since I would rather not play with options, this was going to be one of my short-term investments. I still believed that the share price of Apple would drop around 2% or 3%, therefore I expected a 10% return on investment from the Apple put options.
1. http://investor.apple.com 2. http://extras.denverpost.com/books/chap0411h.htm 3. https://www.google.ca/finance?client=ob&q=NASDAQ:AAPL 4. http://ca.finance.yahoo.com/q?s=AAPL 5. http://www.techradar.com/reviews/pc-mac/tablets/ipad-mini-1096514/review
What actually happened I held onto my Apple put options for a total of four days, from November 13th to the 16th, and I overall generated a 39.87% profit. This actually went way beyond my expectation for this particular investment as I only hoped for 10% profit. Because I made this investment three days before the competition was over, I decided to keep it for the four days despite what happens, unless I made over 100% on the first day â€“ which unfortunately did not happen. Actually on the first and second day I was suffering from a 3% loss, however I did not mind too much because my investment was only around $2500 so 3% was a very small value. I proceeded to making over 30% on the third day as Apple stocks started to drop like I have expected which drove the optionâ€™s premium price up. By the fourth day, I was making over 40% when I ultimately sold the option. In the end, due to commission, I made 39.87%. During these four days, Apple stocks dropped 2.8%, which explains the reason for the increase of the put option. NASDAQ beat the Apple stocks by 1.8% during the days in the option. The closing price on November 16th was $527.68, which was out-of-money with my option because the strike price was $500.00. I am extremely satisfied with this investment, but my only regret was that I only had 2 units of the option, which was only a $2500 investment. If I knew that I could have made so much money, I would have investment everything in it!
NASDAQ (red) beat the Apple stocks by 1.8% from November 13th to 16th
iii)rogers RCI-B.TO Investment: 500 shares of Rogers (class B) stocks (short) Date sold short: 9/14/2012 Price when short sold: $40.51 Date covered: 9/19/2012 Price when covered: $39.51 Commission: $19.99
COI= ($40.51 x 500) - $19.99 = $20,235.01 Gain = ($39.51 x 500) + $19.99 = $19,774.99 Profit = $460.02 ROI= +2.33%
What is Rogers Communications? Rogers Communications Inc. is one of the largest communications and entertainment companies in the Canada. The company provides wireless, cable, and telephone services. Rogers is headquartered in the Rogers Building in Toronto, Ontario. Edward Rogers found the company in 1925, which started the CFRB radio station. The company’s biggest competitor is Bell Canada.
Rogers is traded on both NYSE and the TSX at a price of $43.65 and $43.65 respectively.
Why Rogers? On September 14th, 2012, the Toronto Star released news that stated that Canadian Competition Bureau would be suing Rogers, TELUS, and Bell, along with the Canada Telecommunication Association, for $31 million $10 million from each carrier and $1 million from the CWTA. The Canadian Competition Bureau believes that the three biggest telecommunication companies are allegedly misleading consumers about the cost of premium texting services. The companies were offering “premium texting services” such as monthly subscriptions to games, ringtones and other products, that appeared to be free but were riddled with repeat charges, often monthly. These charges ranged from up to $10 per transaction to $40 every month, and were difficult to remove from a customer’s monthly bill. Melanie Aitken, Commissioner of Competition, said in a press release issued by the Government of Canada this morning, “Our investigation revealed that consumers were under the false impression that certain texts and apps were free. Unfortunately, in far too many cases, consumers only became aware of unexpected and unauthorized charges on their mobile phone bills.” I believed that this news would drive the prices of the telecommunication companies’ stocks down. First of all, most investors uses cellular phones from one of the three major providers, which may agitate the investors knowing that they have been charged extra for their services. This may cut off their loyalty to the company, resulting the selling of the security. Secondly, investors such as myself will be likely to lose faith in the company and want to get rid of Rogers’s stocks as soon as possible to avoid further losses. As well, from my previously knowledge, when Samsung faced the lawsuit from Apple, their stock price dropped substantially, which made me believe that Rogers will face the same thing. For these reasons, shorting Rogers Communications would be a great opportunity for a short-term investment. 1. http://www.rogers.com/web/Rogers.portal?_nfpb=true&_pageLabel=IR_LANDING 2. http://www.theglobeandmail.com/globe-investor/markets/stocks/summary/?q=rci.b-t 3. http://mobilesyrup.com/2012/09/14/rogers-telus-and-bell-sued-by-canadian-competition-bureau-over-misleading-ads-for-premium-texting-services/ 4. http://www.thestar.com/business/article/1256787--canadian-competition-agency-sues-3-wireless-companies
What actually happened? My prediction for the company was a decrease in stock prices due to the lawsuits. I shorted 500 shares of the stock and I ultimately thrived for a total return on investment of roughly 5% on Rogers. Over the course of 6 days that I invested in Rogers, the stock has fallen as I have expected. However the investment has fell under my expectation, since I made only 2.33% return on investment. I decided to cover my stocks at $39.51 because at that point I have already held on my stocks for around six days, and the news for the lawsuit have already faded to nonexistence, resulting for investors to potentially invest in the company again. Although I fell short from my goal, I understood that shorting a stock is extremely risky as the losses are ultimately unlimited and I am a low risk investor so I decided to cover the investment. Two days after I covered my stocks, Rogers communication hit a low point of $39.32 on September 21st. However the price I sold the stock at was the lowest ever since then, so I am very satisfied with my investment even thought I failed to reach my goal. During the 6 days of the investment, Rogers Communications was out preformed by it’s leading competitors, Bell Canada and TELUS – who also faced lawsuits, by over 2%. This was surprising to me because the two stocks have actually face an increase in the $/share in contrast to Rogers Communications’s stocks responding negatively towards the lawsuit. Therefore I am glad that I put my money towards shorting Rogers instead of the other two companies that also faced lawsuits. Rogers was also out preformed by the TSX by 1.98%. Overall this shows that I have made a good investment by shorting the company’s stocks.
TELUS (green) and Bell Canada (red) out preformed Rogers by over 2% as all three companies faced $10 million lawsuits
The TSX out preformed RCI-B.TO by 1.98% 1. http://ca.finance.yahoo.com/q?s=RCI-B.TO 2. http://www.theglobeandmail.com/globe-investor/markets/stocks/summary/?q=rci.b-t
iv)Rona (RON.TO) Investment: 900 shares of Rona stocks (short) Date sold short: 9/17/2012 Price when short sold: $11.47 Date covered: 9/24/2012 Price when covered: $11.26 Commission: $19.99
COI= ($11.47 x 900) - $19.99 = $10,303.01 Gain = ($11.26 x 900) + $19.99 = $10,153.99 Profit = $149.02 ROI= +1.47%
What is Rona? Rona Inc. is a Canadian distributor and retailer of hardware, home improvement and gardening products. The company was first found in 1939 in Quebec. Rona currently has around 700 stores around the world, and is the leading distributor and retailer in its market, which approximately 51595 employees. The company has a sale of around 6 Billion every year. The company holds a 25% share of its nationwide market. The company’s stock (RON.TO) is currently traded on the TSX at $10.71/share. The price of Rona stocks has actually dropped roughly 40% since 5 years ago. The 52 weeks high price of the stock is $14.49/share, and has a low of $8.94.
Why Rona? On September 17th, the Toronto Star the article “Lowe’s withdraws bid to buy Canada’s Rona but leaves door open” stating that Lowe’s has abandoned its $1.8 billion bid for the Canadian home improvement chain. Rona had learned that Lowe’s withdrawal through a news release. Rona said they would continue to concentrate on its own efforts to rejuvenate the company. Due to the withdrawal of Lowe’s from the bid, Rona had to refocus to improve its financial results after months of weakness. In the past 5 years, the revenue has been consistently decreasing. Due to this, Rona must show extra efforts to guide the company back on track. Right after Lowe’s announcement of the withdrawal, Rona’s shares dropped more than 11% in the after hour market. No only did Rona’s stock prices drop, Lowe’s did as well, by over 17%. During that time, Rona has already closed three stores in Whitby, Ont., Calgary and Edmonton that were close to Lowe’s locations and has vowed to take action on the other stores over the following six months. However, Lowe’s actually has very few locations in Canada, only 31 out of 1,745 across North America. Therefore, it shows that Lowe’s was actually not entirely popular in the country. In addition, Rona has been losing market share to the company’s top competitors such as Home Depot, which ultimately shows poor preformance for the company.  From reading this news, I believed that Rona stocks would be a good short term shorting investment. I understood that the stock price has already dropped 11%, leaving little room for further decrease. However many investors would continue to sell their stocks due to the large drop to avoid more losses, which would potentially drive the prices down even more. For this investment, I aimed for a rather low return of investment goal of only 3% because of the lack of room for decrease. From reading the news, I considered shorting Lowe’s stock as well, however the company has already 17% drop in the stock price, further limiting space of more decrease, therefore I figured the risk is too high for a little return investment. Overall, I believe Rona was perfectly capable of decreasing 3%, therefore I invested 900 shares in the company. 1. http://www.rona.ca/corporate/investors 2. http://ca.finance.yahoo.com/q?s=RON.TO 3. http://www.thestar.com/business/article/1257661--lowe-s-withdraws-its-controversial-proposal-to-buy-canada-s-rona 4. http://business.financialpost.com/2012/05/17/sales-indicate-rona-losing-market-share-to-home-depot/
What actually happened? I held on to the stock from September 17th to September 24th for a total of 8 days. Like I expected, the share price of Rona has dropped. I made a return on investment of 1.47% over the course of the eight days. I covered the stock at $11.26. At the time I covered the stock, Rona has shown sign of growth again, so I did not want to risk the current profit by holding the stock for longer period of time. As well, at the time, the news that Loweâ€™s withdrawing from purchasing Rona has already blown over, which gives Rona potential to be a good investment again. Unfortunately three days before I covered the stock, Rona has reached to a low point of $10.98/share, which is $0.28 lower than what I covered the stock as. This shows that I did not make as much money as I potentially could have. After I have covered the stock, the price of the stock actually dropped further to a low point of $11.09/share on September 28th. This shows that the time that I sold my stock was not particularly ideal. However I did manage to make a 1.47% profit, which did fall under my goal. Overall, although I made a profit with this investment, it was still not a particular smart investment. Over the course of the 8 days, Rona has actually outperformed the TSX, which shows that the investment was not ideal for shorting.
Rona outperformed TSX (red) from September 17th to 24th
v)Snc-Lavalin (SNC.TO) Investment: 600 shares of SNC-Lavalin stocks (short) Date sold short: 9/21/2012 Price when short sold: $37.90 Date covered: 9/24/2012 Price when covered: $38.19 Commission: $19.99
COI= ($38.19 x 600 ) - $19.99 = $22,933.99 Gain = ($37.90 x 600 ) + $19.99 = $22,720.01 Profit = -$213.98 ROI= -0.93%
What is Snc-Lavalin? SNC-Lavalin Group Inc. is the largest engineering and Construction Company in Canada based in Montreal. The company is among the top five Global Design firms in the world. It was formed in 1991 from the Surveyer, Nenniger & Chenevert Consulting Engineers (SNC) and the failing Lavalin, another Quebec-based engineering firm. The stocks from this company are traded on both the TSX, with the current price of $37.75/share. The company’s stock has actually dropped over 20% in the past year. In the last year, the highest price the company hit is $55.95, and the lowest of $34.36.
Why Snc-lavalin? On September 20th, the Toronto Star released the article - Ontario judge certifies a $1 billion class action lawsuit against SNC-Lavalin. From looking at the title of this article alone, it sends negativity news to the company. The article states that an Ontario judge has certified a $1 billion class action lawsuit against SNC-Lavalin on behalf of investors who saw the value of their investment in the company plummet on revelation about payments in North America. The lawsuit was brought on behalf of all SNC-Lavalin investors who purchased SNC-Lavalin securities between Feb. 1, 2007 and Feb. 28, 2012 or who bought debentures through the company’s June 2009 prospectus offering. This news was actually made public shortly after the company’s third quarter financial records release. In the third quarter of 2012, the company is doing well but they have much room for improvement. The company has actually dropped 2% in the net income section from the previous year. In addition, the expense for the company has increased in the current year which is rather poor news. From reading this news and looking at the financial records, I expected the company’s stock prices to make a large dive because of the lawsuits. Usually whenever a company release unfavourable news, the company drops in share price. Also, because my previous investment in Rogers, who faced a 10 million dollar lawsuit and dropped 3% in stock price, was successful, I believed that SNC-Lavalin would mimic Rogers and drop as well. The lawsuit can potentially make already investors lose faith in the company and sell their stocks to avoid losses. This would drive the price of the stock lower. In addition, the financial records for the third quarter in the comany was not exceptional, which could also potential drive the price of the stock down. For these reasons, I believed would be a smart shorting investment. I decided to short 600 shares of SNC-Lavalin, and I expected a 3% profit, similar to the one of Rogers. 1. http://www.snclavalin.com/index.php?lang=en 2. http://finance.yahoo.com/q?s=SNC.TO 3. http://www.thestar.com/business/article/1259902--ontario-judge-certifies-a-1-billion-class-action-lawsuit-against-snc-lavalin 4. http://investors.snclavalin.com 5. http://www.thestar.com/business/article/1256787--canadian-competition-agency-sues-3-wireless-companies
What actually happened? I held the 600 shares of SNC-Lavalin stock from September 21st to 24th, for a total of 4 days. During this four days, I actually had a negative return on investment of -0.93%. This means that the stock did not behave the way that I hoped as it increased in stock price instead of dropping due to the lawsuit. This was actually shocking to me because it baffles me on how a company can continue to thrive after facing a large lawsuit. It could have been because investors did not lose faith in the company, so they continued to hold on to their stocks. Right after I short sold the stocks, the stock just went on a slow but constant upward incline. In the first few days, I chose to hold on to the stock because of possibilities of it dropping soon. However by the fourth day, I understood that the stock was not affected by the lawsuit, so I decided to cover my investment and just accept the loss. During the four days, SNCLavalin outperformed the TSX by roughly 1%, which is a bad sign for me because I was hoping the price of the stock would drop. This investment of mine is not particularly smart, but I did learn many lessons from it (described in the lessons learned section).
SNC-Lavalin outperformed the TSX(red) during the four days of my investment
Lesson Learned SNC-Lavalin is actually one of my worst investments in both of American and Canadian portfolios. Before investing SNC-Lavalin, I have made five other investments in my Canadian portfolio, which all have provided me with great profit. The problem I had with SNC-Lavalin was not entirely with the stock dropping in price. I actually made the wrong investment before shorting the companyâ€™s stock. I carelessly made a purchase of 600 shares of the stock instead of shorting selling. When I purchased the stock accidentally, the share price was $38.03, and when I correctly short sold the stock again, the price of the stock has already dropped to $37.90. Because I made the mistake of purchasing the stock, I had to sell those shares, which I did as soon as possible at $37.87. From my accidental investment, I suffered a loss of -0.42%. If I made the investment correctly in the beginning, I would have only lost 0.4% of my investment instead of the 1%, and the extra 0.42%. From this, I learned that I have to be a lot more careful when I am making my transactions to avoid mistakes like this one. From this mistake I always lost $40 from commission alone. Another problem with this investment was that I invested around $22000 in the stock. This was almost half of my buying power at the time. I violated my personal rule of diversification. Although I only suffered from a 1% loss, but 1% of $22000 was $220, which was more than I made on other stock with 5% or 6% profit. From this I learned that I cannot put all eggs in one basket, and have to plan out my diversification better before investing.
vi) Sun Life Financial (SLF) Investment: 300 shares of Sun Life Financial Date sold bought:11/9/2012 Price when bought: $24.99 Date sold: 11/9/2012 Price when sold: $26.12 Commission: $19.99
COI= ($24.99 x 300 ) + $19.99 = $7,516.99 Gain = ($26.12 x 300 ) - $19.99 = $7,806.04 Profit = $289.05 ROI= 3.85%
What is Sun Life Financial? Sun Life Financial Inc. is an international financial service company that is know as a life insurance company, but also has strong presence in investment management. The company is based in Toronto, Canada and was founded in 1865. Sun Life Financials provide insurance, retirement and investment solutions for individuals and businesses around the world including Canada, the United States, the United Kingdom, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. The company is currently traded on three stock markets â€“ American (NYSE), Canadian (TSX), and Philippian (PSE). SLF presently has a share price of $27.03/share.
Five year preformance for Sun Life Financial. the company experienced a total drop of 51.25%
1. http://www.sunlife.com/Global/Investors?vgnLocale=en_CA 2. http://ca.finance.yahoo.com/q?s=SLF.TO
Why Sun Life Financial? On November 8th, I came across the article - U.S. stocks hold most promise for investors, says Sun Life portfolio manager – in the financial post and I became interested in the company. The article itself did not mention any details about Sun Life Financial’s current position in the market but since the company’s analyst is making a positive comment about the market, then the company must be doing well. Therefore I did further research on the company’s recent position. It turned out that on November 7th, Sun Life Financial released their third quarter financial statements and the results were beyond the expectations. The company achieved an operating net income of $401 million, compared to an operating loss of $572 million in the third quarter of 2011. The company also had a reported net income of $383 million, compared to a reported loss of $621 million in the same period last year. These results showed that the company has improved tremendously in the past year – which is a positive sign. I saw this financial report release on the night of November 8th, and the stock has already increased by 4% on November 8th. From my knowledge of other stocks, such as AOL and Facebook, stocks generally make big leaps in stock prices whenever a positive financial report is released. AOL went up by over 8% while Facebook made a good increase of around 20% before falling back again. Therefore I believed that Sun Life Financial has potential to make a greater increase than 4%, so I took the risk and purchased 300 shares of the stock for a short-term investment. Since the company produced such good results in comparison to the third quarter from the previous year, investors like me will still high hopes for the company and not want to sell the stock very soon. From this investment, I was hoping for a 5% profit due to the positive financial report release.
Facebook went up by 19% on the day of their third quarter financial
AOL went up by 22% on the day of their third quarter financial statements release 0. http://business.financialpost.com/2012/11/08/u-s-stocks-hold-most-promise-for-investors-says-sun-life-portfolio-manager/ 1. http://www.sunlife.com/Global/Investors/Financial+results+%26+reports?vgnLocale=en_CA 2. http://ca.finance.yahoo.com/q?s=aol&ql=1 3. http://ca.finance.yahoo.com/q?s=fb&ql=1
What actually happened? I held onto my Sun Life Financial stocks for a total of one day and I made 3.85% profit, which briefly fell under my goal. I only held onto this stock for one day, on November 9th, because the moment the stock hit 4%, I became afraid that it would make a large dive on the next day. Also since I am not a big risk-taker, I did not want to lose the profit I could have made. I realized selling the stock so soon held a great opportunity cost. There is a great possibility that the stock will continue to raise, which it actually did, and I could be missing out on all that profit. However I followed my original motto, which was making some profit is better than not making any. Because of this, I decided to set a stop sell at 4% profit. However due to commission costs, I only made 3.85%. The stock behaved like I wanted it to, which was to continue to increase in profit because of the release of the financial statements. This proved that purchasing a company’s stocks a day before their financial information releasing will provide a great opportunity in high profits as proven in Facebook, AOL, and now Sun Life Financials. During the next two business days, Sun Life Financial’s stock price actually went as high as $26.50/share, before it began making its downfall. In this case, I lost my opportunity to gather an additional 2% profit. This applies to the case of “high risk high return.” If I was willing to risk losing my paper profit on the November 9th, and held my stocks longer until around the 14th, I would have collected a greater realized profit. Nonetheless, I am satisfied with my investment as I almost achieved my goal of making 5% profit. On the day of my investment, SLF beat NYSE, and it continued to outperform for the following few business days.
SLF preformance from November 9th to November 16th
vii) Nexen (NXY.TO) Investment: 250 shares of Nexen (short) Date sold short sold:10/22/2012 Price when short sold: $24.00 Date covered: 10/26/2012 Price when covered: $23.36 Commission: $19.99
COI= ($24.00 x 250 ) - $19.99 = $5,980.01 Gain = ($23.36 x 250 ) + $19.99 = $5,859.99 Profit = $289.05 ROI= +2.05%
What is Nexen? Nexen is an oil and gas company based in Alberta, Canada, founded in 1969 under the name “Canadian Occidental Petroleum Ltd.” aka CanOxy, and was 80% owned by Occidental Petroleum, a Los Angeles-based oil company. It has operations located around the world, including the North Sea in Europe, Colombia, the Gulf of Mexico, and Alberta’s Athabasca Oil Sands. On 23 July 2012, the China National Offshore Oil Corporation (CNOOC) announced an agreement under which Nexen would be acquired by CNOOC. Total cash consideration of approximately US$15.1 billion would be paid for Nexen’s common and preferred shares, and Nexen’s current debt of approximately US$4.3 billion would remain outstanding. The company is traded on the TSX and NYSE, with a currently stock price of $23.29/share and $23.52/share respectively.
Why Nexen? On October 22nd, I saw the news – Nexen shares plunge following Petronas rebuff – written by Todd Korol, published in the Bloomberg. The article states that Nexen Inc. has already fallen by around 20% because of concern in its $15.1 billion purchase by Cnooc Ltd. may not go through following Canada’s rejection of a takeover bid for Progress Energy Resources Corp. Nexen’s stock has already dropped from $25.15 to $20.00 in just a few days, and it is continuing to drop in numerous countries. The Canadian government rejected a $5.23 bid by Petroliam Nasional Bhd. for Calgary-based Progress Energy on Oct. 19, minutes before the midnight review deadline. Industry Minister Christian Paradis said he wasn’t satisfied the bid is in Canada’s interest. An analyst at Canaccord Genuity Corp. wrote in a note to clients “The odds of the proposed acquisition by Cnooc getting approval have fallen,” which negatively affects the company. He also said “We now give the deal over a 50 percent chance of closing versus our previous ‘high probability it closes’ view, with risk to the offering price.”  This news clearly gives a negative vibe to the company as it basically says that the company is sliding downwards in their future. This opens a great opportunity for an investment in shorting the company’s stocks. This news gives current investors a reason to lost hope in the company, as the company is very likely to lose a very expensive deal. The current investors would want to sell their current stocks from the company to avoid further losses, and future potential investors would unlikely to purchase stocks from the company because of the high risks. However I cannot expect too much of a return on investment on this investment if I do short the stock because the company has already suffered a large drop in price and they probably cannot drop much more. Nevertheless, I still believe that the chances of losing the deal with Cnooc Ltd. will drive the prices down, so I shorted 250 shares of the company and expected a 4% ROI. 1.http://www.nexeninc.com/Investors.aspx 2. http://ca.finance.yahoo.com/q?s=NXY.TO&ql=0 3. http://www.thestar.com/business/article/1275214--nexen-shares-plunge-following-petronas-rebuff 204. http://business.financialpost.com/2012/10/04/rio-tinto-cuts-costs-as-iron-ore-prices-fall-iron-ore-price-fall-speeds-up-rio-tinto-cost-cuts/
What actually happened? As I have expected, Nexenâ€™s stock prices did plunge after the discouraging news. I held onto the stock for a total of 5 days, from October 22nd, to October 26th, and I made a total of 2.05%, which fell under my expectation. I originally wished for a 4% ROI, so I held onto my investment for as long as I was under that profit. On the first day after I invested in Nexen the stock made a small dive, however not enough for my satisfaction. For the following two days, the stock make a small, but steady climb, which actually worried me because my paper profit was less than previous. However at that time I was still slightly making a profit, so I held on to my stock despite that it may climb up even more in the following days. On the final day of my investment, Nexenâ€™s stock price made one final dive by around 2%, and at that point I became very afraid that the stock price would climb back up in the following days, so I decided to cover my investment. Thankfully I did because in the next business day, the stock made a jump by over 5%, which would not only lose the paper profit I had at the time, but also leave me with a negative ROI. Therefore, I made a smart decision for the time that I covered my stock even if I failed to achieve my goal. During the day when I invested in Nexen, the company was outperformed by the TSX by over 8%, which is preferable in my case of shorting the stock. Overall, I am satisfied with this investment.
1 4 2 3
NXY.TO preformance between October 19th to October 30th
1. During the business day before I purchased the stock, the price was still relatively high, of $25.13. Between this day and the day when I short sold my stocks, the price has already dropped by 4% 2. The day when I short sold Nexen 3. The day I covered Nexen 4. The business day after covered my stocks. The price of the stock went up by over 5%
vii) Ford (F) Investment: 550 shares of Ford (short) Date short sold:10/3/2012 Price when short sold: $9.82 Date covered: 10/5/2012 Price when covered: $10.23 Commission: $19.99
COI= ($9.82 x550 ) - $19.99 = $5,381.01 Gain = ($10.23 x 550 ) + $19.99 = $5,646.49 Profit = -$289.05 ROI=-4.93%
What is Ford? Ford Motor Company is an American multinational automaker founded by Henry Ford and incorporated on June 16, 1903 in Dearborn, Michigan, a suburb of Detroit. Ford is one of the oldest car companies, and one of the first to establish a middle class car model, the Model T during WWI. The founder of the company, Henry Ford discovered mass production, and production line, which helped thousands of companies to speed up the production time and cut down on costs. The company sells automobiles and commercial vehicles under the Ford brand and luxury cars under the Lincoln brand. Ford owns small stakes in Mazda of Japan and Aston Martin of the United Kingdom. The stock is traded on the New York Stock exchange, currently with a price of $11.48/share.
Why Ford? Because Ford Motors Company’s stocks follows general economy trends, they are very instable. However, this creates great opportunities for both longing and shorting the stock depending on the time of purchase. The stock is perfect for shorting when the economy is showing signs of going into a recession. Ford’s stocks will likely drop in price, giving the investor a profit. On the other hand, the stock is perfect for longing when the general economy shows sign of recovery because the stocks will follow the trend and incline in prices. Ford is falling behind in market shares in the automobile world. Companies such as General Motors, and Japanese companies are slowly overpowering Ford, which negatively affects the company. The company’s current share price of $9.81/share which is around $10 less than of General Motors. The company also dropped in profit from $2.8 billion to $1 billion from the first quarter to second in 2012. In addition the company is not doing well in markets other than North America. Therefore the future for Ford Motors as a company is not too bright. I would short the company’s stocks because of the low chances of stock price increasing due to those factors. Furthermore, the current economy is not at its prime, and is declining especially with the debt issues in Europe. The company bears much risk because the share prices are too dependent economy. If the economy makes sudden changes, it will affect Ford’s stocks largely and possibly cause investor losses. Investors must follow the general closely to know times of incline and decline in order to make profit with companies such a Ford Motors. Therefore, being in the automobile industry, a cyclical stock, and dropping behind other brands in the industries, Ford Motors is a risky investment, and is good opportunity to be shorted. From this investment, I am hoping for a 4%.
1. http://ca.finance.yahoo.com/q/co?s=F 2. http://www.bloomberg.com/news/2012-07-20/ford-profit-squeezed-by-excess-plant-capacity-in-europe-cars.html 3. https://www.google.ca/finance?client=ob&q=NYSE:F 4. http://topics.nytimes.com/top/news/business/companies/ford_motor_company/index.html
What actually happened? Different from what I expected, Ford stocks actually went up despite the distress markets and the loss in market shares in European countries. I held on to the stock for a total of 3 days, from October 3rd to October 5th, and suffered from a loss of 4.93%. Even after I covered my stocks, Ford continued to soar for some odd reason, and had not fallen below my original short selling price to this day. I decided to cover the stock at the time I did because I could not have afforded to continue losing money seeing how my portfolio was already going in the negative range. In addition, I initially only allowed myself to face 2% losses for each stock and I have already passed beyond that, so I thought it was smart to just let the investment go. During this the time of my investment, I beat NYSE by roughly 2%, which is actually negative sign since I short sold the stock. This investment is actually one of my rather unwise ones, and if I had a chance, I would not have made this transaction at all.
Fordâ€™s preformances between October 3rd to October 5th
ix) Facebook (FB) Investment:300 shares of Facebook (long) Date sold bought: 9/13/2012 Price when bought: $20.86 Date sold: 9/14/2012 Price when sold: $21.66 Commission: $19.99
COI= ($20.86 x 300 ) + $19.99 = $6,277.99 Gain = ($21.66x $300 ) - $19.99 = $6,478.01 Profit = $200.02 ROI= 3.19%
What is Facebook? Facebook Inc. is an American multinational Internet corporation which runs social networking website Facebook. The company was founded by 2003 by Mark Zuckerberg, while he was attending Harvard University. The company also developed applications such as Instagram. After having been privately owned by Mark Zuckerberg and other founders, and the shared ownership having been contested in the meanwhile, Facebook eventually filed for an initial public offering on February 1, 2012. Facebook began selling stock to the public and trading on the NASDAQ on May 18, 2012 with an IPO of $38/share.  The stock is trading at just over $27/share.
Why Facebook? On September 11th, Facebook’s CEO, Mark Zuckerberg arranged a rare public appearance to answer some question about his company, and his growth as the chief executive of a multi-billion-dollar publicly traded company. Zuckerberg said that he had a team working on way to develop a search platform – perhaps as a direct competitor to Google Inc., which in itself has been trying to compete with Facebook with its Google+ social network. Because of this appearance and question-answer session, the company’s stock started to grow tremendously. In just a few days, the stock went up by over 10%. From this news and growth in the company’s stock, I became more intrigued in this company and tried to see if there are potential growth investment opportunities. Few days after Mark Zuckerberg’s surprise public appearance, the company developed new advertising platforms. The company is trying to expand mobile advertising. This is good news for the company as it may increase their profit in the future. From looking at Facebook’s stocks history, it clearly shows that Facebook is extremely unstable. From the company’s high IPO price, to falling almost to $10/share, and climbing back on the charts by over 10%, Facebook is a risky investment, yet the company bears high potentials for great earnings. However from the past, it shows that Facebook follows its own trends for generally a couple of weeks. For example, after the Facebook’s IPO, the stock just steadily dropped in the price for months without a sign of lighting up. For this reason, I believed that Facebook was capable of surpass growing only 10%. Facebook will be a potentially a great short term investment. From Mark Zuckerberg’s public appearance and stating that Facebook has high profitability, to the company’s new advertising platform, I decided to invest 300 shares in Facebook and expected a return of 5%.
1. http://investor.fb.com 2. http://ca.finance.yahoo.com/q?s=FB 3. http://www.insidermonkey.com/blog/facebook-inc-fb-ceo-makes-rare-public-appearance-18012/ 4. http://business.financialpost.com/2012/09/14/facebook-shares-rise-to-highest-in-month-on-new-advertising-platforms/
What actually happened? Facebook behaved according to my hopes and increased in prices. I invested in Facebook for a total of 2 days, from September 13th to September 14th, and made a profit of 3.83%, which unfortunately fell below my expectation. I chose to hold on to Facebook for such short period of time because I knew Facebook fluctuate consistently, and just there holds a large chance for the stock to make huge dives on the following day even if it was growing previously. Even though my goal was achieving a profit of over 5%, the moment when Facebook increased to 4%, I became afraid to keep holding onto the stock, so I sold my investment. After I sold my stocks, Facebook actually continued to grow in priced to a high point of $23.32/share, which is $1.66/share higher than the price at which I sold it. This was actually happened only three business days after I sold my stocks. If I kept my shares in Facebook, my profit would actually increase to over 10% as opposed to my realized profit of 3.83%. This is the opportunity cost I had to pay for not taking the risk of losing my previous paper value. During the time of my investment, Facebook outperformed NASDAQ, which is good for me because I wanted the stock to do well. Overall I am content with my investment, although I could have increased my profit if I was willing to take bigger risks. As of now, Facebook stocks have increased over 40% from the time I have invested in it. If I know what I know about Facebook stock, I would have rushed my selling process.
Facebookâ€™s preformance between September 11th to September 20th, the stock outperformed NASDAQ (red) 1. September 11th ($19.32/share) - Mark Zuckerberg made a surprise public appearance and the stock price went up over 10% 2. The day when I bought Facebook Stocks 3. The day when I sold Facebook Stocks and earned a 3.85% profit 4. Three business day after I sold my stocks, where the price of stock went up by another 8% 5. Facebook beat NASDAQ by over 12% during this time
x) Coca Cola (KO) Investment: 600 shares of Coca Cola (long) Date sold bought:10/1/2012 Price when bought: $38.24 Date sold: 10/22/2012 Price when sold: $36.97 Commission: $19.99
COI= ($38.24 x 600 ) + $19.99 = $22,963.99 Gain = ($26.12 x 300 ) - $19.99 = $22,152.01 Profit = -$811.98 ROI= 3.54%
What is Coca-Cola? Coca-Cola Company is a multinational beverage corporation and manufacturer that was first established in 1886 by a pharmacist named Dr. John Pembertonin in Atlanta, Georgia. The company has grown from selling a modest 9 drinks a day in 1886 to over 1.8 billion a day. The company offers over 500 brands sold in over 200 different countries. The company owns many highly popular soft drinks such as Coca-Cola and Sprite, and also owns the Vitamin water and the Smart Water series. Coca-Cola has set new standards for both carbonate and healthy drinks. The stock is current traded on the New York Stock Exchange for $37.71/share.
Why Coca-Cola? Coca-Cola Company is a stock for the long-term investors than the day traders. Because Coca-Cola is a blue chip company, the stocks are quite stable, hence providing little risks and less return. For the past decade, Coca-Cola held a rather stable stock price, but not of high value. The company’s ability to keep up during recessions and give hopes to analysts to not drop in share price adds great value to Coca-Cola investment. However some potential risks the company has is being pushed down by up and coming beverage companies, or current ones such as PepsiCo, since PepsiCo is already making more revenue and has a higher share price than Coca-Cola Company. However this has not made a big impact on Coca-Coca yet. Nonetheless, the company is also consistently moving toward the better. Coca-Cola Company has just partnered with JBF Industries to Accelerate PlantBottle Plastic Packagin. Coca-Cola aims to continue bring renewable, lower-carbon plastics to the marketplace and use PlantBottleTM packaging technology in all of its plastic bottles by 2020. Coca-Cola’s effort to benefit not only the company, but also the World, creates wonderful reputation for the company, and reduces the possibility of large dives in share prices. From this news, investors may understand Coca-Cola’s good intentions and further invest in the company or hold on to their current stocks. It creates a great opportunity for a rather long-term investment. In comparison to many other companies, Coca-Cola possesses very little risk in investment. With this investment, I am only hoping for a 3% profit, as I understand that Coca-Cola is a steady investment that bears low but promising returns.
1. http://www.coca-colacompany.com/investors/ 2. https://www.google.ca/finance?client=ob&q=NYSE:KO 3. http://investing.money.msn.com/investments/stock-price/?symbol=pep& 4. http://www.foodworldnews.com/articles/2394/20120930/coca-cola-partners-jbf-industries-accelerate-plantbottle.htm
What actually happened? Coca-Cola stocks actually went the opposite direction as I have hoped. Instead of making 3% profit as I have hoped, I collected a negative ROI of 3%. I held onto Coca-Cola stocks for a total of 23 days, from October 1st to October 22nd, which is actually my longest investment. During the time after I purchased the stock, the stock just went a slow yet constant decline. However on October 5th, the stock did increase by merely 1%, which is not worth selling stock. Like I said in my reason for making this investment, I expected Coca-Cola to be a long-term investment, hence I wanted to hold the stock for around a month. Every time the stock showed a glimpse of lighting up, such as on October 11th, and the 17th, I continued to hold on to my stocks expecting it to rise back up on the charts, instead of selling it to minimize my losses. However, different to what I hoped, the stock just continued to fall down. By October 22nd, I lost completely hope in the stock so I sold it. Because I invested a rather large volume in the stock, which was a flaw in this investment, I could not afford to continue to accept the loss. During the 23 days I invested in Coca-Cola, KO outperformed NYSE by less than 0.5%. Overall this investment was rather unwise and disappointing. 
KO outperformed NYSE (red) by less than half a percent
Conclusion From early September to November 16th is perhaps one of the most stressing times in many years. On many of the occasions, my mood was entirely dependent on how my stocks were preforming. Also in numerous dreams of mine, I was crying rivers because my shorted stock prices shot up exponentially while my longed securities dropped faster than the speed of light. Despite this, if I were given the opportunity do this Investopedia challenge again, I would say yes without a doubt. This stock market simulation represented the real life stock markets effectively, which helped teaching me various valuable lessons regarding the world of securities trading. From this profound experience, I have developed a business mindset and I will more conscious when it comes to investing my money. With this all said, I would now talk about exactly what I learned from these two months. Like every investor, I want to hear good news from my stock, and I want the value of my cash and buying power to go up, but like every inexperienced investor, achieving that was a mission. Out of the 32 companies I decided to invest in, I only earned profits in 18 companies and experienced losses in the other 14. I realized that my biggest mistake in investing is my impulsiveness. Whenever I open up the business section in a newspaper website, I will only read the title, while paying very little if not no attention to the actual content of the article. If the title of the article makes the company sound positive, I will immediately purchase shares in the company, and if the news is negative, I will go short the company. On many occasions, this method worked for me, but of course there were many times that this method failed to do me justice. My investment made in companies such as Sears Canada, SNC-Lavalin, Bank of Montreal, and Apple had dragged the value of my portfolio down tremendously because of my failure to justify my reasoning behind the investment beforehand. For example, I invested in Apple because of the releasing of Ipad Mini, and I believed that it would bring the price of the stock up. In this instance, I just looked at the surface of the news. I did not research on whether or not the release of the product is actually successful or not, whether people actually wanted to purchase the produce, and whether the reviews for the product is positive or not. I did not look at the trends Apple stocks were in at the time, and I did not look at how Appleâ€™s competitors are preforming. I just looked skimmed the fundamental of the news, which seemed positive for the company, so I impulsively purchased large volume of shares from the company and lost great amount of money. To be honest, I am glad that I did lose so much money in this investment because I learned that I cannot afford to behave so rashly. If this investment were used with real money, then I would be practically burning money. If I had a chance to do handle this investment again, I would have done more and better research before throwing the money in. 28
Another flaw I possess that is shown through my everyday life and my investment style is that I am sometimes very careless. More than once have I longed a stock when I wanted to short it, or shorted a stock when I wanted to long it. Even several times, I tried to sell the same stock 3 times, which just ate my money away without doing any actual benefit to my portfolio. As I have explained in my lessons learned section of my SNC-Lavalin investment. I longed the stock when my intention was short sell the stock and I lost a great deal of money from it not only with commission but also the fluctuation of the stock price. Another time I made this mistake is with my Dollarama investment. However with that investment, my mistake actually gain my over $600, meaning that I just got very lucky. At the end of the simulation, I realized that I have wasted over $500 on mistake transactions, and if I do this in real life, I would be a very depressed investor. This taught me to be more careful when I am making a trade, and to make sure to review everything before hitting submit. Another investing flaw I have is my poor judgment of the volume of stock I should invest in. With numerous of my investments, I invested too great or too small of a volume. For example, with Groupon and Apple options, I invested less than $5000 in each of the companies, and when I made profits off these companies, I made very little because of the small volumes, and my ROI would belittle because of the commission. In these cases, commission actually makes a substantial difference in my amount made. In other cases, such as CocaCola and SNC-Lavalin, I invested too much in the companies. In both of these investments, I put in almost half of my buying power, and it shows great difference when I make a profit or loss. In both of the cases, I suffered from losses unfortunately. For these companies, even though I only suffered from around 4% loss, I lost around $1000 due to the large volume. This is actually a huge flaw in my portfolio, which potentially prevented me from gaining a higher overall return on investment. This taught me to strategize investment better beforehand. If I actually made a productive strategy, or followed my initial strategy better, I would have calculated and categorized my investments better. I also need to stick with the rule of thumb of not putting all my eggs in one basket. If I had the chance to do this simulation all over again, I believe that I will end up with better results both of my portfolios. I will be more experienced, and I will refrain from making the same mistakes I have from this time around. I would do better and more efficient researches, which will familiarize myself better with my investments. I would make a clearly planned out strategy before beginning making investments to ensure that all my transactions will be for the benefit of reaching my goal. At one point in the simulation, I was actually up by 4% in my Canadian portfolio. That slipped away from my fingers as I started to make careless and rash investments. If I had a second chance, I would not make this mistake again as I will make more efforts into keeping my profit. In the end of the simulation, I failed to meet my initial goal of making 3% in my American portfolio, and 4% in my Canadian portfolio. Despite this, I am satisfied with my results because suffering from the losses taught me more valuable lessons to be a wise investor. Now I know exactly what regular people who trade securities for a living feels like. It is rather stressing and I do not think I would ever consider it as my main source of income. This project is perhaps the most profound experience of grade 12, and it has definitely is opening a beautiful path to the business world for me. For this, I thoroughly enjoyed this stock market simulation.
Bibliography “Ontario Judge Certifies a $1 Billion Class Action Lawsuit against SNC-Lavalin.” Thestar.com. N.p., n.d. Web. 10 Dec. 2012. “Teaching the World to Sing.” History of Coca-Cola: Our History, Coca-Cola Fun Facts, & More. N.p., n.d. Web. 30 Sept. 2012. <http://www.thecoca-colacompany.com/heritage/ourheritage.html>. “Archive Of Quarterly Earnings Releases.” Coca-Cola. N.p., n.d. Web. 30 Sept. 2012. <http://www.thecoca-colacompany.com/ investors/earnings.html>. “Google Finance: Stock Market Quotes, News, Currency Conversions & More.” Google Finance: Stock Market Quotes, News, Currency Conversions & More. N.p., n.d. Web. 30 Sept. 2012. <http://www.google.ca/finance?client=ob>. “KO: Summary for Coca-Cola Company (The) Common - Yahoo! Canada Finance.” Yahoo! Canada Finance. N.p., n.d. Web. 30 Sept. 2012. <http://ca.finance.yahoo.com/q?s=KO>. “Reference for Business.” Apple Computer, Inc. N.p., n.d. Web. 30 Sept. 2012. <http://www.referenceforbusiness.com/history2/31/ Apple-Computer-Inc.html>. “AAPL: Summary for Apple Inc.- Yahoo! Canada Finance.” Yahoo! Canada Finance. N.p., n.d. Web. 30 Sept. 2012. <http://ca.finance. yahoo.com/q?s=AAPL>. “Apple Inc.: NASDAQ:AAPL Quotes & News - Google Finance.” Apple Inc.: NASDAQ:AAPL Quotes & News - Google Finance. N.p., n.d. Web. 30 Sept. 2012. <http://www.google.ca/finance?cid=22144>. “Apple Inc (AAPL) Hits $600 Mark Only 57 Days After Hitting $400.” ValueWalk. N.p., n.d. Web. 30 Sept. 2012. <http://www. valuewalk.com/2012/03/apple-aapl-share-price-hits-600/>. “Subscribe To Phones Review.” Android vs IPhone Market Share, 52 against 33 Percent Â» Phone Reviews. N.p., n.d. Web. 30 Sept. 2012. <http://www.phonesreview.co.uk/2012/09/05/android-vs-iphone-market-share-52-against-33-percent/>. Voigt, Kevin, Paula Hancocks, Heather Kelly, John D. Sutter, and Dan Simon Contributed to This Report. “Samsung Share Price Drops on Apple Patent Ruling - CNN.com.” CNN. Cable News Network, 27 Aug. 2012. Web. 30 Sept. 2012. <http://edition.cnn. com/2012/08/27/business/south-korea-apple-samsung/index.html>. “Ford | 2nd Green Revolution.” Ford | 2nd Green Revolution. N.p., n.d. Web. 30 Sept. 2012. <http://2ndgreenrevolution.com/features/ company-index-beta/a-h/ford/>. “Heather Torres â Brand Dots.” Heather Torres. N.p., n.d. Web. 30 Sept. 2012. <http://branddots.wordpress.com/2009/05/18/fordfocuses-on-every-target-market/>. “Lowe’s Withdraws Bid to Buy Canada’s Rona but Leaves Door Open.” Thestar.com. N.p., n.d. Web. 10 Dec. 2012.
“Facebook Shares Rise to Highest in Month on New AdvertisingÂ platforms.” Financial Post Business Facebook Shares Rise to Highest in Month on New Advertisingplatforms Comments. N.p., n.d. Web. 10 Dec. 2012. “Facebook Inc. (FB) CEO Answers Questions in Public.” Insider Monkey Free Hedge Fund and Insider Trading Data RSS. N.p., n.d. Web. 10 Dec. 2012. “Competition Bureau Sues Rogers, Bell, Telus $10 Million Each over Misleading Advertising.” Thestar.com. N.p., n.d. Web. 10 Dec. 2012.
“Investing, Stock Quotes and Research, Personal Finance and Business News - InvestorGuide.com.” Investing, Stock Quotes and Research, Personal Finance and Business News - InvestorGuide.com. N.p., n.d. Web. 10 Dec. 2012. “RONA INC. Stock Chart | RON.TO Interactive Chart - Yahoo! Canada Finance.” RONA INC. Stock Chart | RON.TO Interactive Chart - Yahoo! Canada Finance. N.p., n.d. Web. 10 Dec. 2012. “U.S. Stocks Hold Most Promise for Investors, Says Sun Life PortfolioÂ manager.” Financial Post Business US Stocks Hold Most Promise for Investors Says Sun Life Portfoliomanager Comments. N.p., n.d. Web. 10 Dec. 2012. “Groupon IPO Shares Pop 40% On First Trade, Debuts At $28 With A $17.8B MarketÂ Cap.” TechCrunch RSS. N.p., n.d. Web. 10 Dec. 2012. “GRPN Interactive Stock Chart.” NASDAQ.com. N.p., n.d. Web. 10 Dec. 2012. “Rogers, Telus and Bell Sued by Canadian Competition Bureau over Misleading Ads for âpremium Texting Servicesâ.” MobileSyrupcom RSS. N.p., n.d. Web. 10 Dec. 2012. “Rio Tinto Cuts Costs as Iron Ore PricesÂ fall.” Financial Post Business Rio Tinto Cuts Costs as Iron Ore Pricesfall Comments. N.p., n.d. Web. 10 Dec. 2012 “Nexen Shares Plunge following Petronas Rebuff.” Thestar.com. N.p., n.d. Web. 10 Dec. 2012. “Apple Inc.: NASDAQ:AAPL Quotes & News - Google Finance.” Apple Inc.: NASDAQ:AAPL Quotes & News - Google Finance. N.p., n.d. Web. 10 Dec. 2012. “AAPL: Summary for Apple Inc.- Yahoo! Canada Finance.” Yahoo! Canada Finance. N.p., n.d. Web. 30 Sept. 2012. <http://ca.finance. yahoo.com/q?s=AAPL>. “Apple Inc.: NASDAQ:AAPL Quotes & News - Google Finance.” Apple Inc.: NASDAQ:AAPL Quotes & News - Google Finance. N.p., n.d. Web. 30 Sept. 2012. <http://www.google.ca/finance?cid=22144>. “Apple Inc (AAPL) Hits $600 Mark Only 57 Days After Hitting $400.” ValueWalk. N.p., n.d. Web. 30 Sept. 2012. <http://www. valuewalk.com/2012/03/apple-aapl-share-price-hits-600/>. “Subscribe To Phones Review.” Android vs IPhone Market Share, 52 against 33 Percent Â» Phone Reviews. N.p., n.d. Web. 30 Sept. 2012. <http://www.phonesreview.co.uk/2012/09/05/android-vs-iphone-market-share-52-against-33-percent/>. Voigt, Kevin, Paula Hancocks, Heather Kelly, John D. Sutter, and Dan Simon Contributed to This Report. “Samsung Share Price Drops on Apple Patent Ruling - CNN.com.” CNN. Cable News Network, 27 Aug. 2012. Web. 30 Sept. 2012. <http://edition.cnn. com/2012/08/27/business/south-korea-apple-samsung/index.html>. “U.S. Stocks Hold Most Promise for Investors, Says Sun Life PortfolioÂ manager.” Financial Post Business US Stocks Hold Most Promise for Investors Says Sun Life Portfoliomanager Comments. N.p., n.d. Web. 10 Dec. 2012. “Groupon IPO Shares Pop 40% On First Trade, Debuts At $28 With A $17.8B MarketÂ Cap.” TechCrunch RSS. N.p., n.d. Web. 10 Dec. 2012. “GRPN Interactive Stock Chart.” NASDAQ.com. N.p., n.d. Web. 10 Dec. 2012.