# Stock Track Report

Topics: Mutual fund, Stock, Bond Pages: 5 (1270 words) Published: March 25, 2013
I.Portfolio Objective:
A. Allocation
For our portfolio mix, we invested roughly 81% on stocks, 15% on Bonds and 4% on Cash. Our target for the portfolio allocation is that we invested 90% on stocks and 10% on Cash for short term investments. Our goal was investing 80% of our cash for stock market because we know that will get higher return form stock market instead of bonds which is safer to own but bring lower return, and we are young, so we love to take more risk. We also wanted to keep 20% of our money in cash which available for short-term investment. According to the requirements, we ended up spent around 60% on domestic market stock, 10% on international stock market, 10% for short-term stock, 15% on bonds and the rest is in cash which can also bring us interest. As we said above, we are risk takers, so we would have spent all of money for our stock market. Therefore, for this project we think that we followed both active and passive strategy, but we really understand the purpose of this project which help us to begin investing in stock and bond market and its system. II. Performance Evaluation:

Let begin our Stock-Trak performance which the regression result:

Stock-Trak ReportBy Khang Nguyen and Tseveendorj Jigmedsanjaa10-08-2012| | | | | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
The 13% of the R-square is explained by the The alpha has a negative return and the p-value is greater than 1, so it means it is insignificant. In other words, I have an abnormal return. On the other hand, the beta=1.58 which was positive and the p-value was less than 1. My annualized geometric return on the portfolio was negative along with the S&P500 returns. Therefore, it is unreasonable to explain the Sharpe and Treynor Ratio. In order to explicate these ratios, your annualized geometric return has to be positive along with the market index. | | | | | | | |

| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |

As we seen in the table, the R-square is only .13 which means that only 13% of Y is explained by X which is not good. The standard deviation of the portfolio is higher than the market index, which means that the portfolio was risky comparing to the market index. The alpha has a negative return and the p-value is greater than 1, so it means it is insignificant. In other words, I have an abnormal return. On the other hand, the beta=1.58 which was positive and the p-value was less than 1. My annualized geometric return on the portfolio was negative along with the S&P500 returns. Therefore, it is unreasonable to explain the Sharpe and Treynor Ratio. In order to explicate these ratios, your annualized geometric return has to be positive along with the market index.

III. Discussion
On September 13, 2012, the Fed has announced the launch of Quantitative Easing 3. It is a monetary policy used by central banks to simulate the economy. Therefore, the Fed is buying \$40 billion worth mortgage-backed securities every month until at least mid-2015. The reason is simply because lower interest rates help stimulate the economy and make loans to buy securities on margin cheaper. In other words, the purpose of quantitative easing 3 is to create more jobs. Moreover, we as investors experience that it has an immediate effects on the stock market. Investors in search of yield will have more reason to buy equities and to lend money to companies. Therefore, during September stock market indexes such as Dow Jones Industrial and S&P500 reacted positively by...