Finance and Insurance
Stock; Invest; Short-term; Short term; Strategy; Finance
Launched in March of 1957, The Standard and Poor’s 500 Index (The S&P 500) was the first index to be published daily. Starting with an indicator in 1923 for 233 companies, and then growing to 416 in 1941, today it is used as a common benchmark for the health of the U.S. stock market with 500 companies. These 500 companies offer some of the largest stocks (claims of ownership in public American companies) in the United States although it is not the only index to gauge the health of the economy. In 2012, Standard & Poor’s combined its index operations with the Dow Jones Indexes to become a leader in the industry.
Where recording and presenting aggregate financial data is straight-forward, understanding and predicting changes in the profitability of companies represented by this data is limitlessly more difficult. The majority of my financial decisions in this project originated from ideas, problems, or other information presented in articles on the companies I invested in. Both private investors (i.e. me; someone not employed through an investment organization) and professional investors (i.e. Berkshire Hathaway) can benefit from the use of news and sources in this way but primarily only professional investors have access to high-speed data aggregation and reduced latency in trade. Despite the advantages professional investors have over private investors, trading stock can generate profit; quarter 4 of 2016 for example generated $267 billion in weighted share earnings.
My project, Short-term Investing, focuses on the generation of profit through the trading of stock on a market simulator called Investopedia. Investopedia mirrors trading in a ‘real’ market and even includes commission charges and access to stock analysis. My goal is to gauge the profitability of chosen companies (majority in the Energy Sector) and predict the movement and volatility of the stock, using the S&P 500 as a baseline. On a $10,000 initial investment, I tried to generate 1% profit/month over a 3-month horizon using my unique investment strategy. During these 3 months, I persistently researched different industries, companies, and analyzation techniques while primarily investing in the Energy Sector but also pursuing diversification to mitigate potential loss. Recognizing that oil prices traditionally drop in the winter and peak in the summer, my investment in the Energy Sector was with the intention of taking advantage of this pattern.