Project 1 Re submission

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SUNY Empire State College *

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Course

6020

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Finance

Date

Jan 9, 2024

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docx

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12

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Project – Part 1 Portfolio Construction - Asset Allocation FSMA-6020-01 Investment Analysis Symbol Company Name Average Price Paid Quantity Profit Loss Profit Loss Percentage AAPL Apple Inc 171.35 100 356.00 2.08% AMGN AMGEN Inc. 264.62 10 4.60 0.17% AMZN Amazon.com Inc. 127.26 100 -130.00 -1.02% GOOGL Alphabet Inc - Ordinary Shares - Class A 130.99 50 204.00 3.11% META Meta Platforms Inc - Ordinary Shares - Class A 301.42 27 90.99 1.12% MSFT Microsof Corporation 316.12 30 97.20 1.02% NFLX NetFlix Inc 369.23 10 33.60 0.91% NVDA NVIDIA Corp 435.76 30 333.60 2.55% SBUX Starbucks Corp. 92.41 30 -1.20 -0.04% TSLA Tesla Inc 250.09 100 996.00 3.98% NASDAQ (Historical Prices) Date Open High Low Close Adj Close Volume 2023- 09-29 14853.35 14901.85 14664.78 14715.24 14715.24 5,138,500,00 0 2023- 10-02 14717.90 14892.18 14701.52 14837.57 14837.57 4,554,700,00 0 2023- 10-03 14744.05 14819.87 14504.14 14565.62 14565.62 4,684,310,00 0 2023- 10-04 14613.23 14803.04 14592.56 14776.25 14776.25 4,308,070,00 0
The tables above include the stock purchase price and number of stocks bought this past Friday, September 29, 2023, before end of day for the market and Thursday, October 5, 2023, as indicated since last feedback. As part of this project, I would be following up the stock movement to incorporate the appropriate P/L and RoR, the current data is based on last update completed on Thursday, October 5, 2023, as well. I have decided to focus on the NASDAQ Composite Index which is a market capitalization-weighted index of more than 2,500 stocks listed on the Nasdaq stock exchange. It is a broad index that is heavily weighted toward the important technology sector (55.32%), followed by consumer discretionary (18.80%) and healthcare companies (8.08%). The Nasdaq Composite Index produced an annualized return of 14.66% over the 10 years through July 7, 2023. Because the Nasdaq Composite is dominated by the historically volatile technology sector, index performance tends to be more volatile than that of the S&P 500 or the Dow Industrials. However, it is important to understand that technology companies are the driving force behind today’s economy, driving the economy forward with products that they are bringing to market and the ways in which they operate, leading to this high volatility not just on the downside but also on the upside, leading to higher-than-average rate of returns, which is essentially what investor with higher risk acceptance would prefer. Therefore, the selection of this index for my project.
Annual Returns over SPX YEAR NDX SPX 2008 -41.89% -38.49% 2009 53.54% 23.45% 2010 19.22% 12.78% 2011 2.70% 0.00% 2012 16.82% 13.41% 2013 34.99% 29.60% 2014 17.94% 11.39% 2015 8.43% -0.73% 2016 5.89% 9.54% 2017 31.52% 19.42% 2018 -1.04% -6.24% 2019* 17.93% 13.57% Expected US Stock 1yr performance (Median Average Analyst estimates) MSFT +26.70% 400.00. Engages in the development and support of software, services, devices, and solutions. Operates through the following business segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Microsoft is exposed to economic risk from foreign currency exchange rates, interest rates, credit risk, equity prices, and commodity prices. A portion of those financial risks is hedged, but they may impact their financial statements. Market Cap 2.373T Beta (5Y Monthly) 0.90 PE Ratio (TTM) 32.99 EPS (TTM) 9.68 Earnings Date Oct 23, 2023 - Oct 27, 2023 Forward Dividend & Yield 3.00 (0.96%) Ex-Dividend Date Nov 15, 2023 Management Effectiveness Profit Margin 34.15% Operating Margin (ttm) 41.77%
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Return on Assets (ttm) 14.25% Return on Equity (ttm) 38.82% AAPL +16.83% 200.00. Engages in the design, manufacture, and sale of smartphones, personal computers, tablets, wearables and accessories, and other varieties of related services. It operates through the following geographical segments: Americas, Europe, Greater China, Japan, and Rest of Asia Pacific. Sector: Electronic Technology. Industry: Telecommunications Equipment. Apple's international exposure mainly arises from the goods it sells, but there is also some indirect risk that it faces with its suppliers. The direct risk arises when selling in foreign markets, with the price of goods denominated in foreign currencies. At the retail level, Apple aims to achieve pricing parity worldwide. The price of an Apple product in a foreign currency will be the equivalent of that product's USD price on the domestic market. The company therefore is exposed to risk when it attempts to repatriate earnings from foreign countries back to the United States. There is significant exposure to the pound, the euro, the yen, CAD, AUD, HKD, SGD, as well as the won and yuan. Market Cap 2.735T Beta (5Y Monthly) 1.27 PE Ratio (TTM) 29.30 EPS (TTM) 5.97 Earnings Date Oct 25, 2023 - Oct 30, 2023 Forward Dividend & Yield 0.96 (0.56%)
Ex-Dividend Date Aug 11, 2023 Management Effectiveness Return on Assets (ttm) 20.90% Return on Equity (ttm) 160.09% AMZN +37.68% 175.00. This is a multinational technology company, which engages in the provision of online retail shopping services. It operates through the following segments: North America, International, and Amazon Web Services (AWS). Sector: Retail Trade. Industry: Internet Retail. The international exposure is significant due to the fluctuations, operating results that may differ materially from expectations, and record significant gains or losses on the remeasurement of intercompany balances. Market Cap 1.3T Beta (5Y Monthly) 1.24 PE Ratio (TTM) 104.10 EPS (TTM) 1.21 Earnings Date Oct 25, 2023 - Oct 30, 2023 Forward Dividend & Yield N/A (N/A) Ex-Dividend Date N/A Management Effectiveness Return on Assets (ttm) 2.47% Return on Equity (ttm) 8.71% NVDA +43.71% 625.00. engages in the design and manufacture of computer graphics processors, chipsets, and related multimedia software. It operates through the following Profit Margin 24.68% Operating Margin (ttm) 29.23% Profit Margin 2.43% Operating Margin (ttm) 3.29%
segments: Graphics Processing Unit (GPU), Tegra Processor, and All Other. Sector: Electronic Technology. Industry: Semiconductors. Expanded export controls on AI chips are by far the biggest risks to Nvidia's exuberant outlook provided back in May, so investors should consider their exposure at this point. Market Cap 1.3T Beta (5Y Monthly) 1.24 PE Ratio (TTM) 104.10 EPS (TTM) 1.21 Earnings Date Oct 25, 2023 - Oct 30, 2023 Forward Dividend & Yield N/A (N/A) Ex-Dividend Date N/A Management Effectiveness Return on Assets (ttm) 2.47% Return on Equity (ttm) 8.71% GOOGL +14.64% 150.00. Engages in the business of delivering online advertising, cloud-based solutions that provide enterprise customers with infrastructure and platform services, the provision of communication and collaboration tools, and sales of other products and services such as apps and in-app purchases, hardware, and subscription-based products. Sector: Technology Services. Industry: Internet software/services. Google faces serious domestic and international exposure over anti-trust lawsuits and regulatory challenges. In 2015-16, the European Union brought charges against Google for Profit Margin 2.43% Operating Margin (ttm) 3.29%
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manipulating search results to promote its own shopping sites. Facing billions in fines, Google could join the likes of Microsoft and Intel among companies successfully targeted by the EU. Market Cap 1.709T Beta (5Y Monthly) 1.06 PE Ratio (TTM) 28.39 EPS (TTM) 4.79 Earnings Date Oct 23, 2023 - Oct 27, 2023 Forward Dividend & Yield N/A (N/A) Ex-Dividend Date N/A Management Effectiveness Return on Assets (ttm) 12.96% Return on Equity (ttm) 23.33% TSLA +11.08% 278.00. Engages in the design, development, manufacture, and sale of fully electric vehicles and energy generation and storage systems. The company operates through the following segments: Automotive and Energy Generation and Storage. Sector: Consumer Durables. Industry: Motor Vehicles. The company has manufacturing facilities in the US, Germany, and China and has operations across the Asia Pacific and Europe. Presence in various countries insulates the company from the risk associated with economic and political factors of a specific region. Market Cap 825.396B Beta (5Y Monthly) 2.09 Profit Margin 21.05% Operating Margin (ttm) 26.44%
PE Ratio (TTM) 75.82 EPS (TTM) 3.43 Earnings Date Oct 18, 2023 Forward Dividend & Yield N/A (N/A) Ex-Dividend Date N/A Management Effectiveness Return on Assets (ttm) 9.94% Return on Equity (ttm) 27.14% META +26.63% 380.00. Engages in the development of social media applications. It builds technology that helps people connect, find communities, and grow businesses. Sector: Technology Services. Industry: Internet software / services. Meta has multiple class actions and derivative actions filed in the US courts and elsewhere, with allegations centered on privacy, security, and other issues. Meta is currently under review for its compliance with EU GDPR regulations regarding user data transfer to the U.S. Market Cap 784.273B Beta (5Y Monthly) 1.23 PE Ratio (TTM) 35.40 EPS (TTM) 8.61 Earnings Date Oct 25, 2023 Forward Dividend & Yield N/A (N/A) Ex-Dividend Date N/A Management Effectiveness Profit Margin 12.97% Operating Margin (ttm) 13.46% Profit Margin 18.71% Operating Margin (ttm) 29.22%
Return on Assets (ttm) 11.69% Return on Equity (ttm) 17.36% AMGN - 0.77% 265.00. This is a is a biotechnology company, which engages in the discovery, development, manufacture, and marketing of human therapeutics. It operates through Human Therapeutics segment. Sector: Health Technology. Industry: Biotechnology. The Company is exposed to foreign currency exchange rate and interest rate risks related to its business operations. To reduce their risks related to such exposures, Amgen uses or have used certain derivative instruments, including foreign currency forward, cross-currency swap, forward interest rate and interest rate swap contracts. They do not use derivatives for speculative- trading purposes. Market Cap 141.792B Beta (5Y Monthly) 0.61 PE Ratio (TTM) 17.87 EPS (TTM) 14.83 Earnings Date Nov 01, 2023 - Nov 06, 2023 Forward Dividend & Yield 8.52 (3.26%) Ex-Dividend Date Aug 17, 2023 Management Effectiveness Return on Assets (ttm) 8.54% Return on Equity (ttm) 173.46% Profit Margin 30.02% Operating Margin (ttm) 38.44%
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SBUX + 19.09% 110.00. Engages in the production, marketing, and retailing of specialty coffee. It operates through the following segments: North America, International, Channel Development, and Corporate and Other. Sector: Consumer Services. Industry: Restaurants. The Company’s policy is to have no material open foreign currency positions. As part of its normal operation, the Company borrows and invests in funds in currencies other than USD. The foreign exchange risks of these activities are hedged with the Company limits which are approved by the risk committee. Market Cap 105.801B Beta (5Y Monthly) 0.98 PE Ratio (TTM) 27.57 EPS (TTM) 3.35 Earnings Date Nov 02, 2023 Forward Dividend & Yield 2.28 (2.55%) Ex-Dividend Date Nov 08, 2023 Management Effectiveness Return on Assets (ttm) 11.14% Return on Equity (ttm) N/A NFLX +28.16% 477.50. Engages in providing entertainment services. It also offers a broad set of activities for leisure time, entertainment video, video gaming, and other sources of entertainment. It operates through the United States and International geographic segments. Sector: Technology Services. Industry: Data Processing Services. Netflix’s international expansion faces many challenges. Apart from the difficulties arising from the restrictions Profit Margin 10.81% Operating Margin (ttm) 14.48%
imposed by local governments, Netflix also needs to face the intellectual and economic challenge of creating regional content that could win the favor of local viewers. Market Cap 165.112B Beta (5Y Monthly) 1.29 PE Ratio (TTM) 39.72 EPS (TTM) 9.38 Earnings Date Oct 18, 2023 Forward Dividend & Yield N/A (N/A) Ex-Dividend Date N/A Management Effectiveness Return on Assets (ttm) 7.24% Return on Equity (ttm) 20.26% In conclusion, our assumed target annual portfolio turnover will be low (11%) since I will be following a buy-and-hold investment strategy expecting that high volatility that is characteristic of this index, while making this a passively managed fund only taking profits when necessary, and choosing the appropriate buying opportunities when available. Profit Margin 13.22% Operating Margin (ttm) 17.51%
Resources Chen, J. (2023, August 2). What does the nasdaq composite index measure? . Investopedia. https://www.investopedia.com/terms/n/nasdaqcompositeindex.asp Slen, E. (2019). Nasdaq global index watch . Nasdaq-100 Higher Volatility than the S&P 500. https://indexes.nasdaqomx.com/docs/Nasdaq- 100_Volatility_Index_VOLQ_Methodology_Reference_Guide.pdf Yahoo! (2023, October 6). NASDAQ 100 (^NDX) charts, Data & News . Yahoo! Finance. https://finance.yahoo.com/quote/%5ENDX?p=%5ENDX Garnry, P. (2023, June 28). The dangerous risk to NVIDIAS exuberant outlook . The dangerous risk to Nvidias exuberant outlook | Saxo Group. https://www.home.saxo/content/articles/equities/the-dangerous-risk-to-nvidias-exuberant- outlook-28062023 Team, T. I. (2022, October 2). Is Google a good investment? . Investopedia. https://www.investopedia.com/investing/google-good-investment/ Damchevski, G. (2022, February 14). Three scenarios from our risk-benefit analysis for Meta Platforms, inc. (NASDAQ:FB) . Yahoo! https://www.yahoo.com/video/three-scenarios-risk- benefit-analysis-005951298.html Wu, Y. (Winnie). (2021, July 19). 5 strategic risks for netflix: From competition to regulation . Journo. https://journo.com.tr/netflix-strategic-risks
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