INVE3001 Portfolio Management

This assignment requires students to form groups and use the software“StockTrak”to invest in the Australian and/or U.S.share  market. You may also invest in cryptocurrencies,but this is not compulsory.Students are expected to finish a comprehensive report based on your investment strategy and performance.

Your team will be given A$350,000 (it's not real money)to create an investment portfolio. Your goal is to (at least)match,and hopefully outperform a market index(e.g.NYSE/ NASDAQ Composite,ASX,All Ordinaries). Please note that you will not be penalised should you fail to achieve your goal;marks are awarded based on your discussion in the report. A critical part of the report will be your understanding of why your portfolio performed as it did (a marking guide is available in the folder).

You will need to monitor the performance of your shares on a daily basis.

At the end of the game,you will be required to present a report:

1. Outline your initial strategy and discuss how,and why,it changed (ifit did).

2. Discussing the performance of yourportfolio using metrics such as the Sharpe ratio and Jensen's alpha.

3. Using metrics such as the Sharpe ratio and Jensen's alpha, you will compare the performance of your portfolio with the benchmark index.

4. Discuss the influences (both good and bad)on your portfolio's performance.These influences can include both global and national news (e.g.,wars)and major economic events and factors affecting individual companies.Factors affecting the entire market can be considered as systematic while things affecting individual companies are idiosyncratic.

5. Reflect on the Efficient Markets Hypothesis in light of your experience in managing your portfolio and behaviouralbias.

Teams

The assignment may be attempted in groups of up to three students (no more).I suggest that it's best to choose people you know well and think you can work with for a long period of time. Each team will have a StockTrak account,which allows you to do the trading.Each team should also select a group leader,who will be responsible for group communication,doing trading online after group discussion,and report to me if there are any free-riders.

Rules

Getting Started

·You must establish your portfolio before Wednesday the 17h of July

·Each trade must be carried out using the software StockTrak

Iaccept that you will want tokeep your money in the bankin times offinancial turmoil in real life.This option doesn't exist in the Assignment.

● You may only trade during opening hours of ASX,NASDAQ and/or NYSE.

·You can invest in odd amounts of shares-don'tworryabout rounding up or down.For example,you can invest in 101 shares rather than 100.

● Dividends are ignored but remember that prices fall when the stock goes ex dividend.

● Although buy and hold could be a trading strategy,in this assignment you are required to actively trade in the market.So you will have to trade at least once a week.

·You could buy,sell,short,cover any shares you want.You could also use limit or stop orders if you want.

Make sure you keep a record of the main reasons for trading by yourself.Given the importance we're placing on thinking about why you're trading,we want you to record your reasons for this trade and the information you'reusing.The reason can be anything: information,feelings,a  whim...A  good  investor,however, should have  some idea of why trading. You should also record any information source you're using (articles, news...);remember that the EMH has lots to say about investors'use of information.

These things are important as you'll see when we get to the marking guide.

Below are some helpful links and videos about how to use StockTrak and finish the trading:

https://content.stocktrak.com/student-fag-technical-support/

https://content.stocktrak.com/stocktrak-student-user-guide/

http://www.youtube.com/watch?v=LUD8XZa rlM

http://www.youtube.com/watch?v=EiO0n6LER7E

http://www.youtube.com/watch?v=9M5NTAK3pUY

http://www.youtube.com/watch?v=Et5nJdmK8Vg&t=15s