The descriptions of your investment strategies and activities, focusing on the rationality
behind your investment decisions.
Features on Yahoo Finance’s web page enabled the group to view which stocks were
trading at a higher volume and those stocks that were beginning to lose ground on the
market. The group looked at energy, technology, and health care as our primary business
sectors. Various stocks were evaluated and initial investments were made by using data
from past performance. Our initial criteria for selecting stocks was little more than a
guessing game. That being said, the initial group strategy proved to be a weak form of
investment strategies.
Our initial purchase of DB Crude Oil Double Short ETN (DTO) was our best performing
purchase. This stock, as with our other initial purchases, was bought without any real
understanding of what we were purchasing. It was not until much later in week four that
we understood that DTO is an investment fund short selling Oil Futures. The second
purchase of iPath S&P 500 VIX ST Futures (ETN) was made with just as much knowledge
of what we were actually buying as we had on our first stock. ETN turned out to be one of
our worst performers, which we decided to sell at a 21% loss two weeks later to free up
cash for other purchases. The other stocks purchased during the first week were Apple and
Starbucks mainly based on their large brand name recognition and not due to evaluation of
the company actual values.
The health care business sector purchases focused on Aetna Inc. (AET) and Horizon
Pharmaceutical (PLC). The group decided to purchase Aetna stock after reading the
announcement of Humana Inc. agreeing to sellout to Aetna. We made a poor assumption
that the purchase of Humana would increase the value of Aetna stock without any real
justification of why that would happen. We learned after investing in Aetna, while reading
an article on the topic, the bump in stock price would likely have been better for Humana
stock than it was for Aetna stock. Though as it has turned out, neither stock performed
very well after the announcement of their merger of the two companies.
The purchase of commodities such as oil and gold were discussed, so we invested in
Petrobras – Petroleo Brasileiro S.A. (PBR) on the assumption that oil prices would increase
and opted not to purchase anything in the gold market. The amounts of these first week
