Portfolio management assignment Management – Lessons Learned
Question
Task: What are the key strategies and lessons learned in managing a diverse investment portfolio management assignment amid dynamic market conditions?
Answer
Part 1 - Dynamic Market Environment Analysis of Investment Results and Decision-Making Strategies
I: Summary of Investment Results
I have actively handled my portfolio management assignment, which consists of a combination of individual equities and ETFs, for the past ten weeks (Block, Fisch, Vismara, & Andres, 2019). The investment outcomes as of September 8 are summarised here, including capital gains, losses, and dividend income:
Capital Gains and Losses:
AAPL (Apple Inc.): I invested a total of $15,194.40 in 80 shares of AAPL at an average buy price of $189.93. AAPL is now trading at $182.91 on the spot market. I thus stand to lose $935.20 on this investment at the moment.
ABT (Abbott Laboratories): I invested a total of $11,140 by purchasing 100 shares of ABT at an average price of $111.40. ABT's current market price is $101.56, therefore this position has lost -$984 as a consequence.
BIP (Brookfield Infrastructure Partners): I invested a total of $10,740 and bought 300 shares of BIP at an average price of $35.80. BIP's current market price is $31.06, thus this position has lost $1,422 so far.
CNQ (Canadian Natural Resources Limited): I invested in 200 shares of CNQ at an average price of $60.98, totaling $12,196. The current market price for CNQ is $65.39, resulting in a profit of $882 on this position.
CVNA (Carvana Co.): I paid $18,656 for 400 shares of CVNA at an average price of $46.64. With CVNA trading at $50.51 right now, this trade has generated a profit of $1,548.
MBGAF (Munich Re): I invested a total of $7,863.50 in 100 shares of MBGAF at an average price of $78.635. MBGAF's current market price is $71.098, resulting in a loss on this investment of -$753.70.
RIOT (Riot Blockchain, Inc.): I invested a total of $9,176 to purchase 500 shares of RIOT at an average price of $18.352. RIOT is currently trading at $11.24, which means that this stake has lost $3,556.
UBER (Uber Technologies, Inc.): I spent $6,972 on 150 UBER shares at an average price of $46.48. UBER's current market price is $45.90, therefore this position has seen a little loss of -$87.
I spent $7,467 for 100 shares of USO (United States Oil Fund, LP) at an average price of $74.67. With the current market price of USO at $78.52, this investment generated a profit of $385 (MUHAMMAD ANHAR, 2019).
Portfolio management assignment Performance:
Initial Cash: $100,000
Cash Balance: $315.84
Portfolio management assignment Value: $95,171.44
Percentage Return: -4.83%
It's crucial to remember that while some positions have experienced losses, others have made money. The losses in the positions of AAPL, ABT, BIP, and RIOT are principally to blame for the present negative return on the portfolio management assignment as a whole (Setiawan & Rosa, 2023). However, these losses have been largely offset by the gains in the CNQ, CVNA, and USO holdings.
II: Investment Decision-Making
My investing choices were supported by a methodical strategy based on weekly timeframes for linear regression channels. I was able to find profit and stock accumulation ranges thanks to this method, which enabled me to analyse the stock's present position and trajectory (Raut, 2020).
Take AAPL as an illustration, for instance:
Average Buy Rate: $189.93
Spot Price: $182.91
Regression Channel Central Pivot: $189.50
Regression Channel Lower Accumulation Pivot: $157.00
Regression Channel Upper Book Profit Pivot: $220.00
Investment Objectives:
My investing strategy's main goal is to sell an asset when it reaches a specific level in order to make a profit. My profit objective for AAPL would be close to the upper book profit pivot, which is $220.00.
Risk Tolerance:
I buy equities at the pivot point of the center regression channel to control risk, and I add to my holdings at the pivot point of the lower regression channel. This strategy lowers the possibility of long-term losses and establishes a practical objective close to the pivot point of the upper regression channel.
Investment Time Horizon:
I may record gains before reaching my goals, but I want to keep investments for at least two years. Profits will be recorded at the top pivot in such circumstances, and reinvestment will be taken into account at the center and lower pivots.
Market News and Events:
Since weekly chart analysis offers more trustworthy data on asset patterns and movements, I depend on it. I also take market-impacting macroeconomic news and events into account.
Technical Analysis Details:
To find critical levels in my technical analysis, I employ linear regression on a weekly period. Additionally, I validate trends using the 12 and 24 EMAs (Exponential Moving Averages) and evaluate trend strength using the MACD (Moving Average Convergence Divergence).
Exit Strategy:
When assets hit the higher regression pivot, I'll consider selling them and reinvesting the proceeds when they retrace to the middle and lower pivots.
Performance Benchmark:
To corroborate current market patterns and momentum, I also do the same technical analysis on stock market indices (such as the S&P 500 and NASDAQ) in addition to individual assets.
Portfolio management assignment Allocation:
With a 9:1 ratio favoring stocks, I've diversified my portfolio management assignment across individual equities and ETFs. The goal of this diversification is to increase stability and lower risk. To further reduce risk, stock investments are spread throughout a variety of industries (Asadi & Al Janabi, 2020).
Lessons Learned:
My financial experience has taught me many valuable lessons, one of which is the value of being an expert at making flawless entrance on trustworthy investment stocks. This lessens the possibility of significant retracements, which can result in long-term losses. Critical support and resistance levels for entry, accumulation, and profit booking may be found using technical analysis tools (Hu, Zhao, & Khushi, 2021).
My investing approach is centred on risk management, setting specific goals, and vigilant market monitoring. It is based on systematic technical analysis utilising linear regression channels. Despite certain holdings have experienced losses, the overall approach hopes to produce a profit over the long run.
PART 2- Outlook for the 4th Quarter 2023 in the Capital Market: A Focus on S&P 500 and NASDAQ Indexes
It is critical to evaluate the capital market forecast as 2023's fourth quarter approaches, especially with regard to two important indices: the S&P 500 and the NASDAQ (Jafarova & Aliyev, 2023). These indices are crucial benchmarks for both investors and traders since they help to comprehend the general market mood and direction. In order to obtain insight into possible market movements, we will investigate the present status of these indices using regression channel analysis, EMA (Exponential Moving Average) analysis, and MACD (Moving Average Convergence Divergence) analysis.
S&P 500 Index:
Current Value: 4950
Regression Channel Analysis:
Central Pivot Point: 4000
Upper Pivot (Take Profit) Level: 4500
Lower Pivot (Accumulation) Level: 3500
EMA Analysis:
Price is now higher above the 12-EMA.
The S&P 500 is in an established uptrend since the 12 EMA is located above the 26 EMA.
MACD Analysis:
The MACD Line is below the Signal Line.
Since both lines are above the 0 Line, an uptrend is clearly present.
It's important to remember that the MACD is beginning to lose momentum.
Outlook:
The S&P 500 is currently valued at 4950 and has been moving up. Key levels to watch are provided by the regression channel analysis. The lower pivot (take profit) level at 4500 shows a potential objective for profit booking, while the higher pivot point at 4000 acts as a solid support level.
The upswing is supported by EMA analysis because the 12 EMA is still higher than the 26 EMA. The MACD analysis, however, advises caution. The MACD is ebbing when both lines are above the 0 Line. This is a warning indicator that a regression in the S&P 500 may be imminent.
The 4000 and 3500 levels should be closely monitored by investors as possible entry possibilities. Long-term investors may have greater entry chances if the index retraces to these levels (Mensi, Shafiullah, Vo, & Kang, 2022).
NASDAQ Index:
Current Value: 15500
Regression Channel Analysis:
Central Pivot Point: 12500
Upper Pivot (Take Profit) Level: 16000
Lower Pivot (Accumulation) Level: 9500
EMA Analysis:
Price is now higher above the 12-EMA.
The NASDAQ Index is in a clear rise since the 12 EMA is located above the 26 EMA.
MACD Analysis:
The MACD Line is below the Signal Line.
There is an upswing as both lines are above the 0 Line.
The MACD for the NASDAQ is showing symptoms of losing momentum, much as the S&P 500.
Outlook:
The NASDAQ Index has seen a strong increase, now trading around 15500. Regression channel analysis reveals crucial values to keep an eye on. The lower pivot (take profit) level at 16000 implies a potential objective for profit-taking, while the middle pivot point at 12500 acts as a strong support level.
The 12 EMA is still above the 26 EMA, supporting the bullish position according to EMA analysis. It's important to remember that the MACD is also indicating a possible slowing in velocity.
This scenario is an intriguing one for investors. Like the S&P 500, the NASDAQ might see a pullback. The levels to keep an eye on are 12800 and 9700 since they may provide investors wanting to profit from a potential pullback with appealing entry positions (Al-Najjar, 2022).
Conclusion:
The S&P 500 and NASDAQ Indexes provide insight into the capital market prognosis for the fourth quarter of 2023. Both indexes are presently in uptrends, although there are signs that momentum may be slowing. Both indexes' MACD analyses indicate the potential for retracements, which can present investors with improved entry points.
Investors need to be on the lookout, regularly watch important levels of support and resistance, and be ready to modify their investing plans as necessary. The S&P 500's levels of 4000 and 3500, as well as the NASDAQ Index's levels of 12800 and 9700, are crucial levels to keep an eye on. In the end, managing the dynamic and ever-changing capital market scenario in the fourth quarter of 2023 requires a balanced and educated approach to investment decision-making.
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