The basic things you need to know to create and maintain a healthy stock portfolio.
1. Know your
resources: After your bills are paid, how much money do you have available for investment? (For our class, you will have $100,000, but in real life you will need to think a bit more deeply).
2. Know your
goals. Realistically speaking, what do you hope to accomplish with your investments? Pay for College? Retirement? A certain amount of money? What will the timeframe be for reaching this goal?
3. Know your
risk-tolerance. The stock market is inherently risky, it will require you to deal with loss. How much can you afford to lose?
4. Know your
strategy. Based upon your resources, your financial goals, and your risk-tolerance, you should be able to develop an investment strategy. You should be prepared to stick to the strategy even if the market begins to behave in a way that scares you.
5. Know your
companies. Keep track of how your companies are doing, do they have upcoming changes, challenges, opportunities?
Investment advisers will all tell you the same thing: diversification is the key to a healthy stock portfolio. As we begin to research stocks for our portfolios, we will be following a specific diversification strategy.
Please choose at least ten stocks for your online
portfolio. You should begin researching this week. Your stock portfolio should include at least one of each of the
following:
1. A Local Company. Choose a company that
you know personally, perhaps it is located nearby or a friend or family member
works there.
2. An Energy stock. It can be solar, it
can be wind, or it can be just plain oil, but you need to include some energy
stocks in your portfolio.
3. A Blue Chip. Look through the S & P 500 list and find something a bit different from your other stocks.
4. A Bank. You should include at least one
bank. What bank do you or your parents use? Do they like it? Try buying some of
that bank’s stock.
5. A Science Stock. Choose a company that
is doing something truly revolutionary. It can be anything from biotech to
robotics, but it has to be innovative.
6. A Speculation. Do something crazy,
research a small company that you think might have a chance at suddenly
breaking through with a new product.
7. A Retailer. Do some research and find
out what company is opening new branches, look for franchise opportunities as a
possible sign of growth.
8. A large company with stable growth. Look
through the products you use at home, choose a company that produces the goods
that you and your family are using on a regular basis.
9. A Cyclical stock. You should buy a cyclical
stock. A company that has big swings in value over time: think of companies that may go up or down in value, like construction companies or aircraft makers.
10. A Tech company. You should own some
tech stock.
