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  1. Introduction
  2. Investment philosophy and strategy
  3. Maintenance of a trading diary
  4. Portfolio performance and evaluation
  5. Conclusion
  6. Bibliography
  7. Appendix 1: Trades
  8. Appendix 2: Stocktrak's printout of portfolio shared with one other student
  9. Approach two: Introduction to stock-trak
  10. Philosophy behind stock-trak
  11. Dealing with increased uncertainity
  12. Conclusion
  13. Bibliography

I had $50,000 to spend and see what happened in a six week period. It reminded me of fantasy football. It simulates all major securities and all the results are based on the actual market performance so the only real difference is that the money involved is not real. As such, I tried to treat it as a legitimate portfolio and take it as seriously as I would if it were real.

The rules state that some requirements and transactions are simplified, but it seemed representative of an actual portfolio to me. Stocks could be bought and sold, even traded on the margin or sold short. The NYSE, AMEX and NASDAQ were represented as long as they cost more than three dollars. Foreign markets were also an option, though I admit that it seemed a bit daunting because I am less familiar with that side of investment.

In trying to make the simulation a legitimate experience, I realized early on that my tolerance for risk is limited and I do not like investing for the short-term or based on current trends. The idea of "blue chips" appeals to me even though I am still in a stage of life where my demographic probably has a higher tolerance for risk than I do. M

[...] That would certainly allow me to invest more time in the endeavor. Increased uncertainty needs a greater margin of safety. But the "unknown unknowns" (the potential matters of complexity that one is completely unaware could possibly exist, in the way that no one had looked at swans, in the history of swans, and thought that they might come in other colors) make intelligent assessment of intrinsic value quite problematic, given that the credit bubble has burst. The crystal ball was murky and I went in knowing that sometimes I would have to check my gut, make the bold move and let it ride. [...]

[...] My success came from keeping that in mind. This economic turmoil is like a tsunami and there are other ways to surf it. Because of that and the short-term and relatively few trades involved, standard deviation seems less relevant than the beta that can be found in tracking the S&P500. I terms of beta-ing it, my performance beat the S&P500 consistently. It took a bit to build momentum and that is not including the gold futures, which I only included once I realized the profit. [...]

[...] The bulk of the work was information that I already knew, which should be obvious from my choices, since they are commonly known companies and I shop at or buy products from most of them. Appendix Trades Date Order Symbol Quantity Price Commission Trans. Amount 03/04/09 Buy FSLR - 03/04/09 Buy GE - 03/11/09 Sell FSLR - 03/11/09 Sell GE - 03/24/09 Buy HSP - 03/24/09 Buy AMZN - 03/24/09 Buy AAPL - 03/26/09 Buy M - 04/13/09 Sell M - 04/13/09 Buy AAPL - 04/13/09 Buy HSP - 04/13/09 Buy TXT - 04/13/09 Buy BBY - 04/13/09 Buy BBBY - 04/13/09 Buy AMZN - 04/13/09 Buy BBBY - 04/13/09 Buy AZO - 04/13/09 Sell AAPL - 04/14/09 Buy BBY-DIV 04/14/09 Sell HSP - 04/14/09 Buy AZO - Appendix Stocktrak's printout of portfolio shared with one other student Appendix stock shares price Result Change in Net Assets (after commission) APPROACH TWO Stock-Trak Introduction: Stock-trak Philosophy is an important process for investing, but what's more important, the acid test, is how it really plays out. [...]

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