Share Trading Assignment
Share Trading Assignment
Student no. 497432
Unit Code U21083
Due Date 19/02/2013
Introduction
This project is about whether or not an investor with only publicly available information is able to “beat the market”. We have £100,000 which we can invest in the stock market however this amount must be split into two portfolios. Each portfolio will be made up of investments chosen through theories and strategies which come from either the fundamental analysis or technical analysis approaches.
Fundamental analysis is method which looks at fundamental information such as competitive advantage, earnings growth, market share and quality of management to indicate a security’s future value.
Technical analysis is the other basic trading technique which relies on statistical methods and data charts to detect and predict current and future trends.
The Efficient Market Hypothesis is an investment theory that states that the stock market cannot be “beaten” as the stock market has a level of efficiency which causes existing share prices to integrate all the information which is available and relevant to making decisions on investments. According to the Efficient Market Hypothesis, it is impossible for investors to ascertain undervalued stocks from overvalued stocks as stocks always trade at their fair value on the stock exchange without much fluctuation. This assignment is about testing this theory by applying the fundamental analysis and technical analysis techniques to try to outperform the stock market.
The Efficient Market Hypothesis is composed of three progressively stronger forms:
Weak form
Semi-strong form
Strong form
We traded on the FTSE All Share index for four months to try to make a profit which is greater than the percentage change of the market.
Over the time that I was trading for this assignment, the FTSE All-Share Index grew by 7.85%. To beat the market the investments in both portfolios would have to make a total percentage gain of over this
Student no. 497432
Unit Code U21083
Due Date 19/02/2013
Introduction
This project is about whether or not an investor with only publicly available information is able to “beat the market”. We have £100,000 which we can invest in the stock market however this amount must be split into two portfolios. Each portfolio will be made up of investments chosen through theories and strategies which come from either the fundamental analysis or technical analysis approaches.
Fundamental analysis is method which looks at fundamental information such as competitive advantage, earnings growth, market share and quality of management to indicate a security’s future value.
Technical analysis is the other basic trading technique which relies on statistical methods and data charts to detect and predict current and future trends.
The Efficient Market Hypothesis is an investment theory that states that the stock market cannot be “beaten” as the stock market has a level of efficiency which causes existing share prices to integrate all the information which is available and relevant to making decisions on investments. According to the Efficient Market Hypothesis, it is impossible for investors to ascertain undervalued stocks from overvalued stocks as stocks always trade at their fair value on the stock exchange without much fluctuation. This assignment is about testing this theory by applying the fundamental analysis and technical analysis techniques to try to outperform the stock market.
The Efficient Market Hypothesis is composed of three progressively stronger forms:
Weak form
Semi-strong form
Strong form
We traded on the FTSE All Share index for four months to try to make a profit which is greater than the percentage change of the market.
Over the time that I was trading for this assignment, the FTSE All-Share Index grew by 7.85%. To beat the market the investments in both portfolios would have to make a total percentage gain of over this
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