Steady Progress

    Week 3 of the stock market challenge for finance, for me personally, fell short of expectations significantly. With the high hopes of narrowing down the gap from the top 20 group, my inability to go “all in,” was the contributing factor to my downfall in the challenge. Exercising my strategies from weeks 1 and 2 of collecting research on companies who were predicted to make gains as well as strategies learned in class, I was able to prevent major losses that others did not oversee during week 3. One of several strategies learned in class that I was able to implement in the challenge was enabling a stop order for many stocks I purchased and or short sold during the past week. A stop order is setting a price for a share that will automatically sell the stock if that said price for the share sinks to and or rises to, depending on the scenario, either buy or short sell. This ability to set a constraint to your loss, prevented me from falling under the 95 000 dollar mark in the challenge, therefore giving me the opportunity to increase my overall net worth. With that said, I was able to earn approximately 1652 dollars during the five day week, a substantially larger sum compared to both weeks 1 and 2, combined, at only 120 dollars.

     The first stock that I had invested in several times throughout Wednesday was Lazard Ltd (LAZ). To begin with, I came across this company during the early morning, and found an article published by the Globe and Mail announcing that Lazard had acquired an advisory boutique called Versus Partners, a Toronto based company. Lazard, an investment bank company, in the past year has made significant moves in the banking industry through their wide range of foreign financial services. Their services have earned them 2.4 billion dollars in revenue over the course of 2015, and are expected to increase revenue by a substantial amount acclaimed by many analysts. With the acquisition on Wednesday, Lazard expects to expand their financial advisory services to Canada, which I believed at the time would gain the interest of many investors, thus resulting in a spike in their share value during Wednesday and Thursday, which was exactly what occurred. The stock over the course of Wednesday and Thursday rose from about 35.50/share to upwards of about 37 dollars by mid-day on Thursday, therefore raising my net worth and placing me in the top 25 at one point during the week.

http://www.theglobeandmail.com/newsletters/streetwise-and-rob-insight-newsletter/mega-merger-mania-is-back-weve-forgotten-all-its-woes/article31889474/

http://www.themarketsdaily.com/analyst-actions/company-price-target-watch-lazard-ltd-nyselaz-2/192654/

     The second major stock I invested in throughout the week was Entertainment Arts, most commonly known as EA Sports. As a sports fanatic, I was confident that the share value for the stock would increase at any point during week 3, due to the releases and pre order release dates of Madden 17, NHL 17 as well as FIFA 17. The common trend I observed for the company, through examination of their stock graph was that their share value, the majority of the time, increased significantly from October to late December. With this trend in mind, I also knew that EA had created new game modes for both NHL and FIFA, with FIFA also having a new game engine known as Frostbite. With this knowledge, I continually was persistent in buying and selling stocks during week 3, which unfortunately resulted in a substantial loss. Moreover, even with the addition of the stop order strategy learned in class this week, my net worth slowly began to drop over the course of Monday and Tuesday. My optimism in regards to the share value slowly deteriorated as my net worth plummeted to about 98 000 dollars by end of Tuesday. I made the decision to hold off on any EA stock purchases on Wednesday, as I had found a new company, Lazard Ltd, which seemed to have positive hopes going forward for the next couple of days. As my net worth slowly began to rise back over the 100 000 dollar mark, I chose to take another risk on EA sports and purchased about 300 shares, which slowly became 500 to about 2400 shares, as the share value skyrocketed. As the value of the share went from about 80 dollars to about 84 dollars by Thursday, my inability to hold on to the stock despite its fall in the early stages as well as take the risk of purchasing a substantial sum of shares prevented me from capitalizing on the rise in their share value.

 

     The lesson I have learned this week, is the idea of risk and reward. If I am able to take risks in the market, my ability to earn more money and make stronger outputs of total gains per day will become more significant and influential in the long run of the challenge. With this experience in mind, I strongly believe my ability to earn more money and boost my rankings will follow through as the weeks go by, therefore assisting me tremendously as my goal to reach top 20 continues on.