Share Trading Assignment

Share Trading Assignment Project description Assignment Objectives You are given a notional 100,000 to invest in the UK stock market in shares listed on the FTSE ALL Share index. You need to split your investment 50:50 between two portfolios of shares, one where you selected the shares by technical analysis and the other by fundamental analysis. Your aim is to beat the market with both portfolios. It is important you can demonstrate that you know the difference between these methods. You need to compare and contrast the two portfolios and you need to make explicit reference to EMH in your analysis. Share Trading Assignment The assignment is due in on Friday 30th January 2015 Assignment Objectives You are given a notional £100,000 to invest in the UK stock market in shares listed on the FTSE ALL Share index. You need to split your investment 50:50 between two portfolios of shares, one where you selected the shares by technical analysis and the other by fundamental analysis. Your aim is to beat the market with both portfolios. It is important you can demonstrate that you know the difference between these methods. You need to compare and contrast the two portfolios and you need to make explicit reference to EMH in your analysis. Submission Requirements ? ? ? You need to submit a 2000 word report on your trades, including full referencing according to Harvard APA. It needs to be submitted to Turnitin. An appendix with a spreadsheets of your trades (these should not be submitted to turnitin) Assignment Requirements ? ? ? ? ? ? ? ? You are given a notional £100,000 to invest in the UK stock market. You have four months to trade. This means that you are going to have to use short-term investment strategies. The aim is for you to try to beat the market. The market is represented by the FTSE ALL Share Index – if you do not ‘beat the market you will not lose marks, most people will find it impossible to do better than experienced investors . You must calculate the return on the market from your first trade to your last trade in order to determine whether you have beaten the market or not. The shares MUST be listed on the FTSE ALL Share. You are not allowed to use derivatives, such as options or any short selling. 50% of your investment must be based upon fundamental analysis and the other 50% on technical analysis (Based on two theories – no more or less, just TWO). Each of your portfolios must contain at least 10 shares. You are allowed to trade as many times as you like. Recommend Format Introduction – You need to explain the strategies you used and which if any of your portfolios beat the market. Method – How did you select the companies for your portfolios? You don’t have to give a list of every company and why, it should be in general. The detail should be in the appendix. You need to 1 make reference to the technical theories you have used and justify your approach, this should be done by making direct references to the journal articles read. Results – How did the portfolios perform? Did they beat the market, which was best? Conclusion – You need to tie your results back to the literature you have read on the type of analysis you have used and the EMH. Appendix – Spreadsheet of all of your trades, with notes on why you chose your companies. The spreadsheet needs to have profit and loss for each of your shares and should say your final profit. The spreadsheet needs to take account for trading costs, see below for details. Sources of Data Share prices Yahoo Finance http://uk.finance.yahoo.com/ Morning Star http://companyintelligence.morningstar.com/client/portsmouth you need to access this from the university Bloomberg Financial Database – RB1.08. We will be having classes on this towards the end of S1. This will show you how you can select your companies for the technical analysis. News & Events The short view is excellent for videos http://www.ft.com/markets/the-short-view, we will discuss some in lectures. Yahoo Finance http://uk.finance.yahoo.com/ Bloomberg Financial Database – RB1.08. We will be having classes on this towards the end of S1. This will show you how you can select your companies for the technical analysis. 2 Calculating the trading costs The bid the price you sell at. The ask is the price you buy at. This is the last share price in pence. Above is the share price information from Carphone Warehouse from Yahoo Finance. 3 When you purchase shares you must also pay Stamp Duty of 0.5% of the purchase price. There is no Stamp Duty payable when you sell your shares. You should also assume that you buy your shares online through an internet broker. Assume that the broker charges you a flat fee of £7.50 per trade, i.e. £7.50 when you buy and £7.50 when you sell. Example: You buy 1000 shares at Carphone Warehouse Purchase Cost £1,582.50 1000 x 1.5825(ask price) Stamp Duty £7.91 £1,582.50 x 0.005 Brokers £7.50 It is always £7.50 regardless of the size commission Total £1,597.91 Note: You can buy and sell in any amount you like. In our example we bought 1000 shares, but you do not have to buy in round amounts. For example, you could buy 798 shares or any other number you like. Reading Fama(1991) Efficient Capital Market: II. The Journal of Finance, Vol. 46, No.5 (Dec 1991), pp 1575-1617 Jagadeesh & Titman (1993) Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency. The Journal of Finance, Vol. 48, No. 1, (Mar., 1993), pp. 65-91 Dimson & Marsh (1998)Murphy’s Law and Market Anomalies. Working Paper. pp1-35 Lakonishok, Shleifer; & Vishny (1994) Contrarian Investment, Extrapolation, and Risk The Journal of Finance, Vol. 49, No. 5. (Dec., 1994), pp. 1541-1578. De Bondt & Thaler (1985) Does the stock market overreact? The Journal of Finance, Vol 40, No 3. (July 1985) pp793-805 4 PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET AN AMAZING DISCOUNT :)