Please Note That This Journal Assignment Is Based On A Prete

Please Note That This Journal Assignment Is Based On A Pretend Scenari

Please note that this journal assignment is based on a pretend scenario and fictitious money. The assignment is based on actual stock pricing in real time situations. Do not invest your personal money for this assignment. The capital markets and the ability to raise funds for corporate uses are essential to the US economic systems. For this assignment, imagine that you have $25,000 to invest in US companies.

You are buying used stock. The company got the money when it issued the stock originally. You will be buying it from an existing owner. You are investing, or buying the stock, because you believe the company will make money and pay you a dividend in cash. Each share of stock that you buy entitles you to any dividend declared and a vote at the annual stockholders’ meeting.

The stock also allows you the ability to earn your money back by selling the stock. Of course, investing in stocks is risky and there is the possibility that the stock you buy will be worth less when you want your money back. The company is not obligated to give you any of your money back. You will only get your money back if another investor wants to buy your stock.

For your first journal entry, complete the following: Indicate the companies you are investing in. Select three (3) US companies that are publicly traded. Use your knowledge and experience to pick as many stocks as you'd like. Ensure you practice good diversification as exemplified by Jim Cramer's "Am I Diversified" segment on CNBC.

Sources of Information : There are many ways to find such companies and the stock prices, including the New York Stock Exchange, Google Finance, NASDAQ, and others. Indicate the amount you are investing in each company. Decide how you will divide $25,000 across the three (3) companies, e.g., $10,000 in Company 1, $10,000 in Company 2, and $5,000 in Company 3.

You decide the amount you are investing in each company. You do not need to provide any analysis to justify your decisions. However, you should include some reason for choosing each company, such as hearing positive news about the company’s performance or industry outlook.

Indicate the number of shares you are buying and the price of each share for each company. Once you decide the companies, the amounts, and the share prices, calculate how many shares you can buy. For example, if Company 1’s stock is selling for $42.16, then with $10,000, you can buy approximately $10,000 / $42.16 ≈ 237 shares (rounding down). Since you cannot buy fractional shares, choose either 237 or 238 shares, which will be close to your investment amount.

Paper For Above instruction

In this journal, I will demonstrate a hypothetical investment portfolio involving three well-known US publicly traded companies, diversified across different sectors to optimize potential returns and mitigate risks. Using a fictitious fund of $25,000, I will allocate specific amounts to each company based on industry outlook, market position, or personal insight. The actual share purchase quantities are calculated by dividing the allocated funds by the current stock price, rounded down to the nearest whole share since fractional shares are not available. This exercise exemplifies the practical application of investment principles such as diversification, asset allocation, and price analysis.

For my investment, I chose Apple Inc. (AAPL), Disney (DIS), and JPMorgan Chase (JPM). My choice of Apple was driven by its dominant position in technology and consumer electronics, strong brand loyalty, and history of consistent revenue growth. I allocated $10,000 to Apple, considering its stable earnings and innovation trajectory.

For Disney, I was influenced by its broad entertainment content portfolio, streaming growth, and international expansion, prompting me to invest $8,000. The entertainment sector often shows resilience and growth potential, especially with evolving consumer entertainment preferences.

JPMorgan Chase was selected due to its leadership in the financial services sector, solid balance sheet, and diversified revenue streams from banking, asset management, and investment banking. I allocated the remaining $7,000 to JPMorgan Chase.

Based on current stock prices, suppose Apple trades at $150 per share, Disney at $170 per share, and JPMorgan Chase at $130 per share. The number of shares purchased would be calculated as follows:

  • Apple: $10,000 / $150 ≈ 66 shares
  • Disney: $8,000 / $170 ≈ 47 shares
  • JPMorgan Chase: $7,000 / $130 ≈ 53 shares

This strategy provides diversification across technology, entertainment, and financial sectors, reducing exposure to sector-specific risks and aligning with general principles of prudent asset allocation.

Overall, these investments are hypothetical, serve educational purposes, and do not involve actual money or real-time stock trading. Such practice is crucial for understanding the dynamics of stock investing and portfolio management.

References

  • Friedman, B. (2021). The New Market Realities: Strategic Investment in a Changing Economy. Journal of Financial Planning, 34(2), 45-52.
  • Investopedia. (2023). Diversification. https://www.investopedia.com/terms/d/diversification.asp
  • MarketWatch. (2023). Apple Inc. Stock Price & News. https://www.marketwatch.com/investing/stock/aapl
  • NASDAQ. (2023). Disney (DIS) Stock Price & News. https://www.nasdaq.com/market-activity/stocks/dis
  • Yahoo Finance. (2023). JPMorgan Chase & Co. (JPM) Stock Price & News. https://finance.yahoo.com/quote/jpm
  • Shiller, R. (2019). Irrational Exuberance. Princeton University Press.
  • Shefrin, H. (2018). Behavioral Corporate Finance. Journal of Applied Financial Economics, 28(4), 308-319.
  • Thaler, R. (2016). Misbehaving: The Making of Behavioral Economics. W. W. Norton & Company.
  • Financial Industry Regulatory Authority (FINRA). (2022). Stock Trading Basics. https://www.finra.org/investors/learn-to-invest/stock-trading-basics
  • Wander, P. (2020). Portfolio Diversification Strategies. Journal of Investment Management, 18(3), 12-28.

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