Bernanke

Experience

The experience of managing Wilma’s funds has allowed us to create different portfolios to see if we can create a gain or loss over a two month period. The three different portfolios contained Bonds, Mutual Funds, ETF’s, and stocks. It is definitely apparent that you have to keep an eye on each individual stock and portfolio because you never know which direction the market will turn. Throughout our two-month journey, there have been several factors that have contributed to either a gain or loss in the market place.

The first factor was a Q3 stimulus package was announced by Bernanke suggesting that the Federal Reserve would be buying $40 Billion per month of mortgage backed securities in an effort to reduce interest rates and reduce the high unemployment rate. This was a great opportunity to gain entry on some mortgage-backed securities in order to have an increase in bonds or stocks in that industry.

The second factor contributing to the market conditions was the Presidential election. Many candidates have constituents that have great influence in certain industries of the market. This was a great opportunity to try and focus on the Presidential constituents focus on market influence. It is easy to see what path would have been best after it has happened. Looking back, paying close attention to the influential forces on market conditions is the best way to know what to invest in.

Overall the Portfolio that consisted of mainly bonds had the best ROI and served to have the least risk. Because of the Q3 stimulus, the mortgage-backed securities that we invested in gave us the greatest return. The portfolio that consisted of mutual funds and stocks did the worst. We lost around $600 on just one mutual fund during the two-month experience. We were able to gain a bit more by actively trading stocks. The stocks that were in the entertainment and electronic industries seemed to do well, especially getting closer to the holidays. Entertainment...