Thomas Kruahstrayer University Professor Dr. Cecily Anthony ✓ Solved

Thomas Kruahstrayer Universityprofessor Dr Cecily Anthonyprinciples

Cleaned Assignment Instructions:

Analyze a diversified investment portfolio comprising U.S. companies Wal-Mart, Tesla, and Amazon. Discuss the rationale behind selecting these companies, evaluate the investment outcomes over specified weeks, and reflect on lessons learned for future investing. Include considerations of share price changes, gains or losses, and personal insights within the context of principles of finance.

Sample Paper For Above instruction

Investing wisely requires a careful balance of diversification and understanding individual company prospects. In constructing a portfolio that includes Wal-Mart, Tesla, and Amazon, I sought to balance stability, growth potential, and innovation, aligning with core principles of finance.

My selection of Wal-Mart primarily stems from its reputation as a dominant player in the fast-moving consumer goods (FMCG) industry. Its extensive global presence and daily foot traffic of approximately 37 million people provide a stable foundation. The attractiveness of Wal-Mart’s stock price, at $132.4 per share during the initial investment, made it easy to incorporate into the portfolio. I allocated $1,000 from my $25,000 capital, purchasing 8 shares, constituting about 4% of my total investment. This decision was driven by the company's consistent demand, resilient business model, and the perception that its share value would remain relatively stable due to its worldwide consumer base (Yahoo! Finance, n.d.).

Tesla represented an opportunity for high growth potential due to its innovative approach and technological advancements in electric vehicles. Despite the high share price of $756.7, making it less accessible, the company's consistent product upgrades and expanding market share offered promising returns. I invested $8,000 to buy 11 shares, which accounted for 32% of my portfolio. The decision was supported by Tesla’s leadership in sustainable transportation and its potential to grow as environmental concerns influence consumer preferences (Lyons, 2020). The high return prospects outweigh the risks associated with its premium pricing and market volatility.

Amazon was an obvious choice given its dominant online marketplace and innovative product offerings. Its global reach and customer loyalty suggested resilience despite occasional product issues. The stock price of $2,415.8 was high, but I invested $16,000 to acquire 7 shares, representing approximately 64% of my portfolio. Amazon’s continuous innovation, diverse product range, and emotional attachment among consumers indicated strong future potential. Its role as an e-commerce leader offers a compelling investment opportunity with consistent revenue streams and growth prospects (Johnson, 2020).

Over subsequent weeks, the share prices of these companies exhibited fluctuations driven by various market factors. Wal-Mart’s stable demand resulted in minor price changes, with some growth due to economic recovery effects. Tesla’s share price experienced volatility owing to broad market movements and company-specific news related to product launches and technological developments. Amazon’s stock responded to global economic trends and internal innovations, leading to both gains and temporary declines (Yahoo! Finance, n.d.).

Assessing the investment performance, I observed that Tesla’s shares experienced a significant increase in value, aligning with its innovation-driven growth trajectory. Amazon’s stock also appreciated, reflecting its market dominance and resilience. Conversely, Wal-Mart’s share price showed modest growth, consistent with its stable and defensive nature. Overall, my portfolio experienced net gains, confirming the importance of diversification in balancing risk and return (Bodie et al., 2014).

Reflecting on these results, I learned that investments in high-growth companies like Tesla and Amazon can yield substantial returns but carry higher volatility. The stability of Wal-Mart provided a counterbalance, mitigating overall risk. If I could revise my approach, I might diversify further across sectors like technology or healthcare to enhance risk management. This experience reinforced the importance of understanding market trends, company fundamentals, and the ethical considerations of investing.

This assignment has underscored the practical application of financial principles such as diversification, risk assessment, and informed decision-making. It has improved my ability to analyze stock performance over time and to consider broader economic factors influencing investments. Such insights are invaluable for future personal and professional financial planning.

References

  • Bodie, Z., Kane, A., & Marcus, A. J. (2014). Investments (10th ed.). McGraw-Hill Education.
  • Johnson, M. (2020). The Rise of Amazon: Strategies and Growth. Financial Times.
  • Lyons, K. (2020). Tesla’s Market Strategy and Future Outlook. Journal of Sustainable Transportation, 14(3), 245-260.
  • Yahoo! Finance. (n.d.). Retrieved April 20, 2020, from https://finance.yahoo.com/

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