Now Based On Your Understandings Or Techniques And Philosoph

Now Based On Your Understandings Or Techniquesphilosophies You Buy S

Now based on your understandings or techniques/philosophies you buy some stocks using this money. Your performances will be tracked at the end of this term. Please note that you are required to submit a report (not more than two-page) on your performance and critically analyze your approach (that is, what went wrong) from your learning from this course

INVESTMENT GAME 3 Game Investment Challenge On Investopedia Stock Investment involves purchasing items or assets with an aim of income generation or appreciation in the future. During an investment, a business person purchases a good that can be in, but also be used to create wealth. Investment decisions should be extremely carefully.

Investors need to engage more with background information about stocks in the stock market to enable them to make the right investment choice. Critical technical analysis experience is an enormous requirement for the purchase of assets and investment in the market. My investment experience was very impressive during the first trial. Since I had no prior experience in this kind of business, I found it to be an eye opener to my interest in venturing into such investment. During this venture.

From this game, I have been able to learn how to invest in real companies. As I invested in the game investment challenge on Investopedia stock, I realized that there were several mistakes I committed, which would most probably cost me in the future if repeated. First, before making any decision about purchasing stock, it is important to consider what the company does and its history in its stock market progress. Before making my decision on the investment, I made random decisions other than a strategic decision concerning this investment. For instance, I did not take the time to go through the profitability of Facebook as a company.

Despite its popularity, this site does not guarantee high profits on the stock market. I bought Facebook stock at one of the highest prices, which was $76.26, and sold it below the price I bought it. The second critical factor that I did not consider was to take time critically to observe the progress of stock in the market before making the decision to invest. Stock market requires keen observation of particular stocks of interest. Such observation may entail a close look at profitability of the company and its earnings history and outlook.

Before any stock investment, it is essential for an individual to observe the per-share earnings and the net income of the company. An investor must identify positive earnings before an investment decision. A thorough scan of older stories and news about a company are essential during the decision-making process. Any viable company must have a history of steady growth. I started of by buying 10 shares of Facebook, Inc. at $78.12 believing it is a good share based on its popularity.

On October 2, I bought 50 shares of Google but the value of my portfolio dipped by $40.25 to $99,959.75. On the same day, I bought 100 shares of 3D Corporation and 50 shares of Apple, Inc. that buoyed the value of my portfolio to $110,205.43. On October 3, I purchased 50 shares of Alibaba. The reason I bought stock in Alibaba based on Alibaba stock news that was a hot topic due to its popularity. The value of my portfolio further increased to $100,573.13.

I then purchased 2000 shares of GTAT Advanced Technologies at $1.70, the decision was based on technical analysis through analyzing the company’s stock charts and historical data. On October 8 the value of my portfolio stood at $99,6111.95. On October 9th the share price of GTAT Advanced Technologies fell to $1.30 and I thought it was an opportunity to buy the shares at a bargain and I made a further purchase of 1000 shares and the value of my portfolio fell further to $98,509.87. Desperate to turn around my fortunes I sought to diversify. Hitherto, I had purchased shares in technology and related industries.

I purchased 900 shares of Coach, Inc. (Textile industry) on October 9, but the value of my portfolio declined further to $98,145.47. Google shares had also dropped from the previous purchase price of $565.05 to $560.37 on October 9, and I thought it was another opportunity for a bargain purchase and I bought 35 more shares. By this time, I had lost the value of my portfolio had lost $3,582.52 of my initial $100,000. On the same day, I bought 30 more shares of Facebook, Inc. And at the time the value of my portfolio increased slightly to $96,571.54.

On October 13, I decided to sell my entire investment in Coach, Inc. 900 shares that had appreciated slightly from the purchase price of $33.84 to $34.46, however, this only worsened my position and left the value at my portfolio at only $95,184.18. I also decided to sell all 40 shares I held in Facebook, Inc. because it seemed to be on a loosing streak and my losses rose further to $5,667.44 with the value of my portfolio standing at $94,332.56. I evaluated my portfolio and realized all my shares were in technological companies. To diversify, I bought 300 shares of Canadian National Railway, a company in railroads industry; I bought it also based on following the most bought stocks in the market by successful and experienced investors.

The value of my portfolio increased to $97,611.55, however, I still had a loss of $2,388.45 from the initial $100,000. I sought further diversification by purchasing 350 shares of Coach, Inc. but tis only driven the value of my portfolio down to $94,462.33 making me to post a loss of $5,537.67 from my initial investment of $100,000. Evaluating my strategy I realize I made several mistakes among them is poor timing, poor diversification, following trends and overreacting to good or bad news. I never diversified enough and out of the eight companies I invested in six of them were in technology industry. My timing was also poor especially in trading Facebook, Inc. stock that I bought 10 shares at $78.12 and another 30 shares at $76.32 only to sell all of them at a much lower price of $76.26.

Overall, I realize that to invest successfully in the stock market you need to pick your stocks carefully based on key fundamental such as; ratio analysis, evaluation which include PE and FCF and the companies’ susceptibility to bankruptcy pay attention to margin of safety concept. Make prudent judgment on when to trade, and avoid your portfolio being concentrated on any one sector. Finally, look at a good company with reasonable stock price.

Paper For Above instruction

The investment challenge provided a practical platform for applying fundamental and technical analysis, revealing both strengths and weaknesses in my approach to stock trading. Throughout the game, I observed that while initial enthusiasm and trend-following can generate rapid gains, they often lead to poor decision-making when not complemented by thorough research. My strategy predominantly relied on market trends and news headlines, which exposed inherent risks, especially in volatile markets or with stocks experiencing temporary declines. Critical reflection indicates that a more balanced focus on company fundamentals, diversification, and timing could have mitigated some of the losses.

One critical mistake was buying stocks based solely on popularity or recent news without adequate analysis of the underlying company's financial health. For example, purchasing Facebook shares at high prices without considering its profit margins, earnings history, or price-to-earnings ratio led to unnecessary losses when the market sentiment shifted. Fundamental indicators such as PE ratios, free cash flow, and debt levels are essential metrics that help identify undervalued stocks or warn against overvalued ones. By neglecting these, I risked holding overhyped stocks that declined in value, thus affecting my portfolio negatively.

Moreover, I lacked patience in observing the stocks' performance over time. Engaging in short-term trading based on daily fluctuations often results in buying high and selling low. A more disciplined approach aligning with long-term investment strategies—waiting for stocks to reach fair value or rebound from dips—might have improved my results. For instance, my repeated purchases of Google shares during price dips could have been more strategic if I had waited for confirmation of upward trends or secured better entry points through technical analysis.

Furthermore, inadequate diversification notably increased my vulnerability to sector-specific downturns. Concentrating investments in the technology industry made my portfolio susceptible to risks associated with sector volatility. My diversification efforts toward the railroads industry and consumer discretionary sectors were too late and insufficient to offset tech losses. A well-diversified portfolio across multiple sectors, including defensive stocks and bonds, could have reduced overall volatility and protected capital during downturns.

Technical analysis played a significant role in my decision-making process, especially in identifying entry points for stocks like GTAT and Coach. Analyzing stock charts, volume, and historical trends provided insights beyond fundamental data, demonstrating the importance of combining both approaches. However, my timing was often poor, resulting in buying at peak prices and selling at lows. Developing a disciplined trading plan with clear entry and exit criteria would have minimized emotional reactions and reduced losses.

Looking forward, my key lessons include the importance of comprehensive research before trading, including ratio analysis, profitability assessment, and understanding industry trends. Recognizing the value of a margin of safety—buying undervalued stocks with strong fundamentals—can provide a cushion against unforeseen market shocks. Consistent monitoring and adjusting my portfolio based on economic indicators and company performance are vital for long-term success.

In conclusion, this investment game underscored the necessity of integrating fundamental analysis with technical insights, maintaining discipline in timing, and pursuing diversified, risk-aware strategies. Avoiding emotional reactions to short-term news and focusing on disciplined investing principles can significantly enhance outcomes. As I continue to learn and adapt, implementing these lessons will improve my ability to make informed, strategic investment decisions in real-world markets.

References

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