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York University
Administrative Studies
ADMS 3531

YORK UNIVERSITY STOCK­TRAK REPORT ADMS 3531 N W2012 Eugene Myslinsky 208083420 3/27/2012 Stock-Track Report Eugene Myslinsky - 208083420 For the past three months we have been participating in a Stock-Trak Simulation exercise to experience what it takes to trade in the stock market. In this report, we will explain which strategies I chose to follow, which investments were the most and least successful to my portfolio and lastly, what advice we would give those who are looking to trade with real money. Investment Strategy and Selection The strategy I employed for our Stock-Trak simulation was to diversify our portfolio among different sectors, various stocks with relatively low risk, and stocks which were positively/negatively correlated with other securities in our portfolio. My goal was to make a gain of 10% return on our overall. The policies put in place to achieve my 10% goal are as follow: a) Trading with the exchange trend: Mathematical analysis has shown that equity price changes are mostly random with a small trend component, this is an important pillar of knowledge as this is the only strategy which will give positive results in the long run (usually seen within 4 weeks) b) Cut losses: When faced with a stock that has been underperforming beyond reasonable doubt and expectations it must be cut off in order to protect the return on my portfolio. c) Long Positions are kept until they stop performing well: I’ll hold onto our long or short positions as long as they consistently provide us with a favourable ROI. d) Manage Risk: Asset allocation and diversification are of great importance in this area as they are the key contributors to the mitigation of risk. Diversifying the type of assets I invest into allows us to eliminate unique risk from the investment and market risk can also be decreased by investing into foreign markets. The asset allocation policy that I chose to follow in the beginning consisted of roughly half of my portfolio value in futures commodities and the other half split between energy, technology, retail and financial. I only invested in the U.S. market due to the lack of information and unfamiliarity with markets other than the U.S. and Canadian ones. I wanted to diversify my Page 2 of 6 Stock-Track Report Eugene Myslinsky - 208083420 portfolio with bonds; however the meagre return that they offered did not entice us at the time as we felt that the money could be used for more profitable investments. My Best and Worse Investments Best and worst Equities in our portfolio CLNE (Multiple Trades) Clean Energy Fuel Corporation, a firm that finances, builds and develops renewable gas fuelling stations all across Canada and the US had released their earnings report the month prior; the resulting report triggered an enormous amount of volume traded over the next two days with a sharp increase in price in the first day which continued to hold an upward trend consistent with the index. However; I was feeling slightly sceptical in buying the stock as StreetRatings had rated the stock as “Hold”; instead I kept our eye on it and finally decided that a long position was right for this stock. It earned 27% in 3 weeks. This was partially due to the negotiations with the U.S. government for possible contracts to create renewable gas stations all across the United States which would have given the company preferential government treatment and expected earnings. However; analysts were beginning to speculate that the stock was overvalued as they expected only a $0.17 increase in EPS while the stock price was still soaring 30% above the correct value. In turn I shorted the stock and made a small profit. DGAZ (MMF) Inversely Linked to the S&P Natural Gas Index Excess Return This was a younger stock that had just increased it’s price by 100% in 4 weeks. When I looked at the S&P Index I could see that natural gas and heating oil were dropping; as were the futures for heating oil and natural gas. These price changes came during a period of warm weather during the winter in Canada/U.S.; however I thought that the stock would drop as the energy prices went up. The opposite happened and I lost $3000 only to watch it drop significantly at a
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