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      02-17-2012, 10:28 PM   #1
Cheeserolling
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$100,000 + Nyse = ??? (NSW)

I've got a project that entails putting 100 grand into the stock exchange. I will start on Monday and end in May. Once the stocks are chosen, they remain. I am not able to buy/sell anytime I want. So what I'm looking for is stocks that will give me the best return in May. I'm not that knowledgeable on the subject so I was hoping you guys would throw some advice my way. This is a class project for an economics course and I really want to wipe the floor with everyone. I'll try to answer any questions regarding the criteria. Thanks in advanced. Here is some motivation to help
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      02-17-2012, 10:48 PM   #2
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How are you going to substantiate your decisions if you just take others' stock picks? You think your grade will depend only on return?
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      02-17-2012, 10:49 PM   #3
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100k$ on Apple. Safest bet you can do with this POS market. It is at 500$ now... by the end of May, the new MBP and iPad 3 will be revealed. Easily will be at minimum 525$/550$.
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      02-17-2012, 10:52 PM   #4
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I'm not sure if my grade solely depends on the outcome of the stocks. My teacher didn't explain much beyond what I already told you.
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      02-17-2012, 11:01 PM   #5
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Quote:
Originally Posted by Cheeserolling View Post
I'm not sure if my grade solely depends on the outcome of the stocks. My teacher didn't explain much beyond what I already told you.
If I were you, I would start reading/learning on some of the more common analysis methods. Investopedia and onlinetradersforum are good places if you're starting out.

Apply some of the strategies to make a few picks, that way you'll learn something and can explain your work in the project.
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      02-17-2012, 11:15 PM   #6
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Agreed. I think it will benefit me more in the long run if I actually know what I'm doing. Thanks.
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      02-17-2012, 11:55 PM   #7
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Quote:
Originally Posted by abisson View Post
100k$ on Apple. Safest bet you can do with this POS market. It is at 500$ now... by the end of May, the new MBP and iPad 3 will be revealed. Easily will be at minimum 525$/550$.
this
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      02-18-2012, 12:40 AM   #8
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Junior Achievement was always fun....spending hypothetical money on whatever stock you wanted with none of the risk that is reality.
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      02-18-2012, 01:01 AM   #9
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are you limited to stocks...or can you play with commodities, options, futures, etfs, adrs...
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      02-18-2012, 01:23 AM   #10
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You want to buy in on Monday? When the indexes have just closed at Multi-Year Highs? And you expect them to turn huge profits from now until May?

I believe your professor is throwing your class a curve ball. He's trying to see who is the best at protecting capital. Do yourself a favor and invest in things that appreciate on a defensive basis against stock markets going down. Bonds, Precious Metals, etc. There are also stocks you may research that hold value better in a crash than other companies. Companies like this include McDonalds and Starbucks. You can thank me later.
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      02-18-2012, 01:28 AM   #11
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Quote:
Originally Posted by abisson View Post
100k$ on Apple. Safest bet you can do with this POS market. It is at 500$ now... by the end of May, the new MBP and iPad 3 will be revealed. Easily will be at minimum 525$/550$.
AAPL just experienced a huge reversal mark last week. One of the highest selling volumes on record, an intraday pullback from $525 in the positive, and closing in the negative Sub-$500. That stock is over-extended and will likely be retreating. Don't know if AAPL will have enough time to un-wind in these next four months, and then re-wind upwards above $500 to even break a profit.

I wouldn't buy AAPL atm. It's a good company, just not right now.
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      02-18-2012, 01:36 AM   #12
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Quote:
Originally Posted by Vanity View Post
You want to buy in on Monday? When the indexes have just closed at Multi-Year Highs? And you expect them to turn huge profits from now until May?

I believe your professor is throwing your class a curve ball. He's trying to see who is the best at protecting capital. Do yourself a favor and invest in things that appreciate on a defensive basis against stock markets going down. Bonds, Precious Metals, etc. There are also stocks you may research that hold value better in a crash than other companies. Companies like this include McDonalds and Starbucks. You can thank me later.
had my portfolio management teacher do a similar thing. We had to pick 2 stocks from a list and do a rolling 3 yr beta and a Gordon growth. What you find out is that only choosing two stocks based on perceived indicators and history isnt enough, thats the point the teacher was making. I feel you may have the same sort of situation. Hes most likely expecting you to diversify and protect against risk, sort of the opposite of just apple atm.

As vanity said, research defensive stocks. From what weve been seeing defensive stocks should be your best bet. fast food, walgreens, anything that shouldnt be too effected by the state of the economy.
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      02-18-2012, 10:23 AM   #13
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are you limited to stocks...or can you play with commodities, options, futures, etfs, adrs...
Hmmmm. Teacher never mentioned those. I'm going to assume I'm limited to stocks only.
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      02-18-2012, 10:34 AM   #14
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Quote:
Originally Posted by Vanity View Post
You want to buy in on Monday? When the indexes have just closed at Multi-Year Highs? And you expect them to turn huge profits from now until May?

I believe your professor is throwing your class a curve ball. He's trying to see who is the best at protecting capital. Do yourself a favor and invest in things that appreciate on a defensive basis against stock markets going down. Bonds, Precious Metals, etc. There are also stocks you may research that hold value better in a crash than other companies. Companies like this include McDonalds and Starbucks. You can thank me later.
Interesting. So my best bet would be to try to protect the money from further loss, assuming that most companies wont go up? ie:AAPL

Why would someplace such as McDonalds or Starbucks increase when everyone else is decreasing?
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      02-18-2012, 11:31 AM   #15
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Quote:
Originally Posted by Cheeserolling
Quote:
Originally Posted by Vanity View Post
You want to buy in on Monday? When the indexes have just closed at Multi-Year Highs? And you expect them to turn huge profits from now until May?

I believe your professor is throwing your class a curve ball. He's trying to see who is the best at protecting capital. Do yourself a favor and invest in things that appreciate on a defensive basis against stock markets going down. Bonds, Precious Metals, etc. There are also stocks you may research that hold value better in a crash than other companies. Companies like this include McDonalds and Starbucks. You can thank me later.
Interesting. So my best bet would be to try to protect the money from further loss, assuming that most companies wont go up? ie:AAPL

Why would someplace such as McDonalds or Starbucks increase when everyone else is decreasing?
Because there services are needed no matter what the state of the economy is
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      02-18-2012, 11:38 AM   #16
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If I had $100k with an investment time frame through March (which I would never do for short term capital gains tax alone), I would evenly distribute my assets among MREITs. Collectively they tend to hold value against one another well as some of them are more defensively structured than others(backed vs non-backed) and the industry collectively tends to even itself out on that premise. I realized 15% total return last year, with 8% from stock sales that will not generate me any more income and 7% coming from only 1/3rd of my portfolio in MREITs that will continue to generate 15%+ returns for at least another 2 years.

The biggest risk to MREITs is that the Fed would raise the prime rate, and they've already promised the market to hold it at historic lows throughout 2013. Through March, you'll get at least 1 dividend payment (averaging 4-6%) plus the stock appreciation if you're expected to sell it at the end.

Do some research on the big MREITs and split it among them based on the trends (current trend appreciation, 52 week highs) and the dividend (higher tends to have larger risks and/or unsustainable dividends).

On a totally different note, keep in mind that since the stock market's inception, ~25% of profits made by investors have come from stock sales and ~75% have come from dividends.

Disclaimer: I am only an amateur investor and this advice should be taken with a grain of salt. It only represents my own personal experience and observations about the market.

Disclosure: I am short IVR, CIM, CSCO.
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      02-18-2012, 12:48 PM   #17
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Staying in cash and doing nothing would probably beat picking random stocks you have no idea about. Since the market has basically been up every day in 2012, most people will buy high and sell low if they start now.

Some stocks will appreciate by May, but my guess is that more than 50% will decline. I'm not a bear, but believe we are due for a correction (10% or so) over the next few months. Then higher from there.
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      02-18-2012, 12:53 PM   #18
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Put it all on black and show the teacher you're man enough to risk 100k for doubling your money.
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      02-18-2012, 01:22 PM   #19
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Quote:
Originally Posted by Cheeserolling View Post
Interesting. So my best bet would be to try to protect the money from further loss, assuming that most companies wont go up? ie:AAPL

Why would someplace such as McDonalds or Starbucks increase when everyone else is decreasing?
Think inferior goods, Mcdonalds is inferior to say applebees and chilis etc. Starbucks is ify to me. Walmarts doing well given the fact that its an inferior good and i would expect it to keep doing so as long as market outlook continues to look bearish.

In this market, a sales company that specializes on low price, than its defensive more or less. If your wallet was tight what would you skimp on and when would you settle for a lower quality lower price good over a higher quality higher price?
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      02-19-2012, 03:18 AM   #20
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Think inferior goods, Mcdonalds is inferior to say applebees and chilis etc. Starbucks is ify to me. Walmarts doing well given the fact that its an inferior good and i would expect it to keep doing so as long as market outlook continues to look bearish.

In this market, a sales company that specializes on low price, than its defensive more or less. If your wallet was tight what would you skimp on and when would you settle for a lower quality lower price good over a higher quality higher price?
Exactly what he's saying here. This is why big-name investors like Warren Buffet bought a huge stake in Wriggley's gum during the recession back in 2008. People may not have the money to go on vacations, but everyone has spare change to buy gum and cheer themselves up.

There are businesses that exist out there which are considered "recession-proof", or "more" recession-resistant than other businesses. McDonalds and Starbucks have, for the past 5 years, grown at over 25% year-over-year. This includes 08 and 09' and the crashes we had in 10' and 11'. Now, mind you that MCD is at it's all time high, and so is Starbucks, so you must also realize that past-performance doesn't equate to future performance. But there are businesses out there like MCD and SB that are still growing because of their business extensions into the overseas markets.

Also, if you're really looking for an area to bet some money on, why not try Oil commodities? I'm not sure if your teacher allows you to play ETF's, but if he does then an Oil ETF might be considered as Iran has just released warships into the Suez Canal today. This is the second time it's done this since the Islamic Revolution of 1979. Oil peaking to $150/barrel anyone? Brent Crude oil for EU is sitting at ~$120/barrel right now, and US Crude Oil sitting at $103/barrel.

Or, better yet, tell your professor that you're keeping your $100,000 in USD cash. Why? Tell him because the Euro doesn't belong at it's current level of 1.30:1 against the USD and it's depreciation will appreciate your 100,000. Not only do you stand a really good chance of seeing the Euro depreciate these next few months, but it's depreciation will protect your USD capital and give you a nice conversion against other currencies. Essentially, you have more buying power now. Sounds like something your other classmates wouldn't think about, right?

Or do as some of the other posters have said and take a nice stake in a stock that gives good dividend incomes so you atleast have a percentage buffer for how much your asset depreciation risk can be nullified. If you want to play ontop of the Oil play, and believe that Oil may go up in the next few months, look into an MLP stock. These are Oil companies in which you purchase a stake in, and since Oil companies are so profitable you enter into a partnership and collect nice dividends. Some of these MLP companies produce around 6% dividend interest with, if you believe Oil is going to soar, a good chance of their stock appreciating these next few months.

Of course, anything could happen and Oil could top-out with the indexes and take a dive these next few months like everything else. Do your research though.

P.S. Not sure why your professor is asking your class to buy-in on Monday. The NYSE is closed for holidays on Monday...
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      02-19-2012, 06:39 AM   #21
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      02-19-2012, 09:17 AM   #22
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Nobody stands out in these with any traditionally safe bets. Go long financials or some other high beta stocks

Or, like Vanity said, buy some long oil ETFs and wait for shit to hit the fan
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