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Created with Fabric.js 1.4.5 Portfolio diversification is something that, going into this contest, we tried to keep in mind as a team. stock buyers look at industries and sectors, too, not just companies, which is why we held shares in pharmaceuticals, general stores, and even social networks during our time in the Stock Market Game.Putting all of your eggs in one basket is risky to say the least. Diversifying your portfolio helps ensure that if one of your holdings goes sour, itll be outnumbered by the sweet or at least covered byit. You cant predict when industries are going to spontaneously turn on you. DIVERSIFICATION INDEX COMPARISON The Stock Market Game 1 Our team was searching for something that would sky rocket. We asked around our friends; what was the consumer excited for right now? The answer we kept getting was pertaining to the new PlayStation 4. Scanning the graphs of Sonys stock, our team decided to invest 200 shares in its $19.82 stock. We grew to despise that number when the price per share fell to the $16 mark in early November. We were looking to diversify our portfolio when we ran into this pharmaceutical company, the original developer and distributor of a medication called Soliris. A more pricey choice at $119.23, we decided to invest after hunching over their graph for probably no more than a couple of minutes. Alexion Pharmaceuticals gained almost 3% in 5 days and we sold the 100 shares. 3 2 SNE: Sony Corporation ALXN:Alexion Pharmaceuticals Southwest Airlines was the second stock we ever bought. At 100 shares of $15.05 each, our team was excited to invest in this company because we anticipated a lot of air travel as fall rolled in. In 19 days, we sold our shares at $16.19, gaining us a $113.72 we were quite excited about. Though it only went up a dollar and some cents, it proved to be one of our better decisions in this competition. LUV: Southwest Airlines 3 NOTABLE INVESTMENTS Smart Stock personality Jim Cramer often touts diversification as "the only free lunch in finance." INVESTMENT STRATEGY CHANGES FOR THE FUTURE The Dow Jones Industrial Average shows us, through ups and downs in specificindustries or companies in comparison to everything else, tendencies in the market as a whole. Our portfolio, at a pathetic equity in the $97,000s, is actually a bit similarto what we're seeing in the waves of the Dow Jones at the moment.We were up and now we're on a downward path again. Simple enough.So, this could possibly explain why we're doing so badly right now... If the Dow Jones is going down, we can't be the only one struggling. current value: 15,914.62 We should have never gotten Sony, especially 200 shares of it. We were naive in the fact that we didnt know the stock wouldnt go up when the PS4 was released. Apparently, the stock will doits skyrocketing when they first begin spreading the word of a new release, not when the product is actually open to buy. For a rookie mistake, it lost us a lot. We need to get into mutual funds and bonds and other matters of trade. Thats a piece of diversification that we were shaky about getting into right away because of the government shutdown occurring when we began the Game. However, had we gotten in on a couple when we first began, it might have saved us from the large dip we dug ourselves in the end. We deeply need to channel other pieces of research beyond graphsof the past six months before grabbing shares. Though we had logic behind a good number of the companies at hand, the information we relied on the most was the graphs. I dont even think we were interpreting those very efficiently half the time, either, because therewould be a steep incline and we would be in awe without even noticing that the axis had only went up 0.4 of a cent in a week. Our investment strategy wasn't the most intuitiveconsidering the amount of information out there. Weve been basically completely dependent upon trends in graphs teamed with our team logic of what might go up or down in respect to whats going on in the world right now. The graphs were the primary source. The graph of a companys stockultimately decided whether we were buying or shortselling or just leaving it. We were price-based, andespecially once we got to the $98,000 equity mark,we just wanted to get back to where we were. Wehave been patiently waiting for that 1% drop ineverything to maybe become just a 0.5% drop.Its a sad thing to wait on. Anastasia Bailey
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