The current price of the stock for each company selected in Week 3 Stock Journal is indicated below as Week 10 and are based on closing prices for 12th September 2018.
|Week 8||Week 10||Week 8||Week 10||Week 8||Week 10|
|Total Value of investment||$23,664|
|Total loss in Value||($577)|
From the assessment above, it can be seen that the investment made a net loss fueled by the drop in prices for stocks of both Tesla and Alnylam Pharmaceutical. Tesla lost 13% of its value while Alnylam Pharmaceutical lost 4%. Netflix is the only stock in the portfolio that gained with a 7% rise from Week 8. To mitigate against these changes, I would diversify the portfolio and do my research to ensure that I chose stocks that are relatively stable or those that have the potential for upward trajectory as advised by Abreu and Mendes (2010). This will ensure that there is a balance between losing and gaining stocks. As such, the probability of gaining remains high.
This assignment is an eye-opener. It has instilled in me the importance of selecting stocks carefully. Doing a background check on stocks before adding them to my portfolio has emerged as important. This can be done by checking for companies with looming good news. Companies in industries where there is relative growth and potential for discoveries or innovations are more admirable. They include tech companies. But the risk lies in the coming of another innovation that will phase them out. These are important lessons to carry forward in future.
Abreu, M., & Mendes, V. (2010). Financial literacy and portfolio diversification. Quantitative finance, 10(5), 515-528.
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