Report on Investment in Various Stocks

This report presents the outcome of an investment of $10 million in shares of ten corporations. The period of investment was seven weeks commencing on November 13, 2017, and ending on December 29, 2017. Amazon, GW Pharmaceuticals, Apple, Boeing, SandRidge Energy, CME Group, Kraft Foods, Bank of America, Verizon Communications and General Electric were the selected corporations to invest based on their riskiness and profitability. Additionally, to ensure full board diversification, selection of companies was from various industries such as health, financial services, technology, energy, telecommunications, consumer and industrial goods to ensure diversification. Diversification of the stocks is crucial since it facilitates management of risk and also lessens the volatility of the price movements of assets (Dunn, 2011, p.46).

After selecting the various companies to invest in, next was the allocation of funds among the ten stocks. Asset allocation refers to the amount of money that is committed to each asset class a process that involves diversifying among the various asset classes such as bonds, stock and cash (Ferri, 2011, p.4). An investor's tolerance of risk, market expectations, time horizon, and goals are crucial factors to consider during asset allocation. For the case under review, the distribution of $10 million was among the stocks of the ten corporations. The historical performance of the companies was the primary base of allocating funds in addition to risk aggressiveness such as taking a higher degree of risk like investing $2million in Verizon which was not performing well.

Table one presents the profit from the investments in the ten corporations over a period of seven weeks. As of December 29, 2017, the portfolio was worth $10,993,710.69, therefore, generating a profit of $993,710.69 from the initial investment of $10 million on November 11, 2017. The weekly performances of the stock prices of Amazon, GW Pharmaceuticals, Bank of America, Boeing, and CME Group maintained a constant growth. General Electric, however, retained a falling stock price for all the seven weeks under consideration hence reporting an individual loss of $59,032.58. Similarly, stocks of Apple (AAPL) and Kraft Foods (KHC) gave negative returns of $17,175.79 and $12,302.28 respectively following falling shares price in weeks one, three, four, seven and one, four, six and seven respectively. Though other weeks had increasing share prices, the same was not sufficient to offset the losses. Stock prices for SandRidge Energy (SE) fell in weeks 1, 3 and 6 while Verizon Communications (VZ) only experienced a fall in week one. The other weeks presented rising stock prices offsetting the negative returns thus the companies gave positive returns of $3,919.55 and $376,224.40 respectively.

Table 1 Profit from investment in stocks of ten corporations

Company Value of shares ($) as of 29-12-2017 Amount Invested ($) as of 13-11-2017 Profit ($)

29-12-2017

Amazon (AMZN) 1,473,989.31 1,400,000.00 73,989.31

GW Pharmaceuticals (GW) 1,210,059.17 1,000,000.00 210,059.17

SandRidge Energy (SE) 403,919.55 400,000.00 3,919.55

Apple (AAPL) 982,824.21 1,000,000.00 (17,175.79)

Boeing (BA) 2,269,576.18 2,000,000.00 269,576.18

CME Group (CME) 425,413.88 400,000.00 25,413.88

Kraft Foods (KHC) 487,697.72 500,000.00 (12,302.28)

Verizon Communications (VZ) 2,376,224.40 2,000,000.00 376,224.40

General Electric (GE) 340,967.42 400,000.00 (59,032.58)

Bank of America (BAC) 1,023,038.84 900,000.00 123,038.84

10,993,710.69 10,000,000.00 993,710.69

In conclusion, the investment in stocks of various corporations has facilitated a reduction in risk through diversification. The entire portfolio had a mix of stocks with having both upward and downward movements, however; well-performing stocks have absorbed the losses from the loss-making ones. As a result, the investment earned a profit of $993,710.69.

References

Dunn, J. (2011). Investing strategies for success. In Share investing for dummies (3rd ed., p. 46). Milton: Wiley Publishing Australia.

Ferri, R. A. (2011). Planning for investment success. In all about asset allocation (2nd ed., p. 4). New York: McGraw Hill.