Investment Analysis Project

The purpose of using Stock-Trak is to give you a better understanding of portfolio management. You will also learn a variety of financial instruments and their risks and rewards in the real world. The simulation will span the semester – hardly enough time for you to demonstrate your financial prowess to your classmates. Rather, the goal is a rich learning experience.

Your Goal and Measurement

Your clients have entrusted you with $1,000,000 for a period of 10 weeks. If they are satisfied with your performance, they will extend their relationship with you. They are expecting you to invest their money wisely and profitably. While your clients crave high returns, they also enjoy sleeping at night and dislike losses. Specifically, they are concerned about the following criteria with the following weights:
• Absolute return (18%): The total dollar increase in the portfolio over the ten week period
• Risk-adjusted return (23%): The return on the portfolio taking into account the level of risk assumed by you, as measured by the Sharpe ratio
• Maximum draw down (23%): The largest dollar decrease in the portfolio from peak to trough during the ten week period
• Number of days to recover from maximum draw down to high-water mark (18%): The high-water mark is the peak value of your investment portfolio over the period
• Number of days that returns are negative (18%)
Your clients are also evaluating other portfolio managers, all of whom happen to be in the FnEc 261 class (amazing coincidence). At the end of the ten-week trial period, they plan to rank order each of the portfolio managers on the criteria above, weighted by the weights above, to determine the best portfolio manager. A ranking of 1 indicates first place. Therefore, the lowest score will identify the best portfolio manager.

Selecting Your Team

You have the choice of managing your portfolio yourself or teaming with one other classmate for the Stock-Trak experience. If you are new to investments, having a partner to help you and challenge your thinking may be beneficial. Your choice.


Date Event
1/27 Stock-Trak opens for trading
Practice trading for the next two weeks
2/92-3 pg. Philosophy, Process and Portfolio Statement Due
Competition begins, accounts reset to $1 million
4/20 Stock-Trak trading ends
4/22 3 pg. Final Stock-Trak Debrief Paper due

Practice for Two Weeks

Notice that Stock-Trak is open for trading on 1/27/10, but the competition does not begin until 2/9/10. I encourage you to use the two-week trial period to fully understand the software, try some strategies, and get a feel for the market. Your portfolio will be evaluated beginning on 2/9/10. It will be reset to $1 million on that date.

Portfolio Management Constraints

• Each position you take in an asset must be a minimum of 5% of your assets and a maximum of 10% of your assets.
• Cash must not exceed 20% of your portfolio at any time. We want you invested, not sitting on the sidelines.
Philosophy, Process and Portfolio Statement
This 2-3 page double-spaced paper is due on 2/9/10. Ideas for a PPPS are posted on OAK under Stock-Trak. In addition to your philosophy and process, please include the initial positions for your portfolio and your allocations to each position within the constraints above.
Sources of Information for Investors
Sources that you may find to be particularly valuable for your research include:
• Yahoo Finance:
• Wall Street Journal:
• New York Times:
• Investopedia:
• Walker Management Library: Walker Management Library Research Links for Managerial Studies Students

I encourage you to e-mail Jeff Berry with questions regarding Stock-Trak and/or advice about your portfolio.

Final Stock-Trak Debrief Paper

A three-page, double-spaced paper about your Stock-Trak experience will be due at the end of the semester. Please address the following:
• Which positions exceeded your expectations? What factors created the gap?
• Which positions underperformed for you? What factors created the gap?
• What are the key things you learned from your Stock-Trak experience?
• How will your Stock-Trak experience influence your personal investing in the future?