Posted: 9/8/2005 11:37:30 AM EDT
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We have $500k to invest. What would you do? Diversification of the portfolio is obviously ideal. Our mock equity is $8 per transaction, and I'm not sure if we can do bonds or not. What says you? |
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Well, looks like I missed class and they chose in my absence: Coke.............1677 $49.69 $8.00 $83,330.13 Fed Ex...........1039 $80.18 $8.00 $83,307.02 Glaxosmith....1666 $50.00 $8.00 $83,300.00 Nokia..............4968 $16.78 $8.00 $83,363.04 Southwest.......6109 $13.64 $8.00 $83,326.76 U.S. Steel........2866 $29.07 $8.00 $83,314.62 Totals $499,941.57 |
Hope you like beans. |
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I had a similar bullshit project in class back when I was school. The education system doesn't teach fundamentals of money management worth two shits, yet they all seem to have a hardon for a class project like this where speculation is presented as "the" way to invest in equity markets. 
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My prediction: This portfolio takes an absolute BATH. How long is the horizon? |
U.S. Steel: Personally, after the massive boom last year and some of this year I think steel demand has nearly peaked. Even if not several China furnaces are online now and that's going to mean downward pressure on the pricing. Add to this high energy costs (steel is somewhat energy intensive) and high materials costs (as well as shipping which is highly energy driven) and I don't like steel much. If you DID want to play in steel I wouldn't be doing it with U.S. Steel. They are going to be acquiring other firms, I suspect, and thus incurring the costs of absorbing those firms (and paying for them). That added to my expectation that the dollar will remain strong (and thus imports remain attractive) means that I'd be betting on foreign steel before U.S. Steel. Try Novamerican instead. (NASDAQ: TONS). FedEx: Two words. Energy prices. Coke: Four words and two sentences: Aluminum prices. Bad timing. You're at the cusp of winter here. How much coke do you think sells in cold weather months v. the summer? Southwest: The problem with airlines is that the rest of the industry is propped up by being bailed out after repeated bankruptcies. This means that the risk of failure is low (they just keep getting bailed out even when they suck) and that therefore pricing is artificially low (more carriers can run at loss making pricing) and so the advantage to having a decent running carrier (like Southwest) is dulled. This is the one industry where bankruptcies of the competitors actually screw players who are running a profit. In this case Delta and NW will be able to break union contracts and shed debt while still operating and can price low enough to hurt existing players. Plus, it's trading only $1 off it's 52 week high. I don't know how much room up it has. Earnings estimates are due out on the 20th, that's a risky stock to be in before those come out unless you know something. (In which case you should be day trading, not in school!) Nokia: This is the one in here I like. Glaxosmith: I assume you guys bought the AD's (NYSE: GSK). Only 2.5% off of it's 52 week high. Just announced a major investment in flu shot making (costs) by buying up ID Biomedical. That deal has to be approved by shareholders yet but either way it's a lose-lose. If they do, then it's a huge cost for GSK. If they don't then GSK will lose the revenue. Even so, vaccine product is almost never a high margin business. |
Try Nutrisystems (NTRI) They are at a 52 week high, but can still go higher. Just did a great 3rd. quarter. Do your research here. Eta: Try Eresearch (ERES) also. They seem to be moving up also. Sierra Wireless (SWIR) They seem to be moving up. Nasdaq (NDAQ) They are moving up also. That's it. I will IM you an invoice. |