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From the course by Rice University

Capstone: Build a Winning Investment Portfolio

23 ratings

Rice University

Capstone: Build a Winning Investment Portfolio

23 ratings

Course 5 of 5 in the Specialization Investment and Portfolio Management

Put your investment and portfolio management knowledge to the test through five weeks of hands-on investment experiences: • Developing and managing your own simulated investment portfolio, resulting in a peer-graded report covering portfolio strategy, analysis, and performance • Advising case study clients on a variety of investment topics, essentially acting as an investment advisor in a simulated environment recommending strategies for and changes in portfolios based on challenges and issues faced by your clients • Using the sophisticated web-based analytical tools of Silicon Cloud Technologies LLC’s Portfolio Visualizer including portfolio mean variance optimization, historical and forecasted efficient frontiers, Fama-French factor models, and many more Your capstone experiences are directly applicable to managing real world investment portfolios and the final report can be shared with family, friends, and potential or current employers. By the end of the capstone project, you will have incorporated concepts from all four courses, including: • Analyzing multiple asset classes • Asset allocation and risk management • Current market trends • Behavioral finance • Investment styles and strategies • Financial market innovation • Investment performance evaluation

From the lesson

Behavioral Finance

This module, learners will advise case study clients on changes needed in their portfolios and investment behavior which demonstrate behavioral finance biases or puzzles and will also reflect on their own personal biases (either experienced or expected).

Meet the Instructors

Jill Foote
Finance Faculty
Jones Graduate School of Business

Welcome back, in module three you've got two activities to complete and send.

First, you're going to reflect on your behavioral biases.

Either those you've already noticed in your own investment management experience,

or biases you anticipate might be an issue in your sim portfolio.

In your final report tab at the top of page two you've got a typing section to

briefly discuss the three most important behavioral issues you faced.

Along with ways in which you are going to prevent yourself from

engaging in this behavior.

In module three you're also going to start pricing your sim portfolio.

We're going to go to the Price Inputs tab, and

the first thing to note is that Sism has put the dates in for you already.

This is the Friday of each of the five weeks corresponding with each of the five

modules.

This was based on the Monday of module one,

the very first week that you put in on the policy portfolio.

What you're going to do is go to any publicly available website

that carries stock prices, Yahoo Finance, Google Finance, Baidu, or others.

And you're going to week-by-week, using Friday close prices,

copy and paste in as valuesm the prices for

both your policy portfolio assets as well as your new tactical position.

If you can get an adjusted close price, as is dictated here in the notes field,

that would be the best because that includes dividends.

But if you can't, don't worry about it,

the closing price on Friday from any source is absolutely fine.

Over five weeks of the simulation you're not going to

generate very much dividends anyhow.

The next thing we're going to take a look at is the Current Portfolio tab.

This is going to show all of your assets both from your policy and

current portfolio across all of the weeks.

It will also a pie chart up here at the top right with your current assets.

It's very important that you have the right week in terms of prices of tab.

Because your current portfolio is going to change week-by-week.

It's also very important for this to work that you're in the correct week, and

that you have input weekly prices at the end of each of the weeks

that has already taken place.

When we've got the begin weekend here, we notice that our current portfolio

allocation and our policy portfolio allocation are exactly the same.

The pie chart has slices in a different order, but if you look at it closely,

you will see that they are the same.

When we move to Week 1 nothing has changed

other than my total portfolio value has gone up a little bit, thank goodness.

But my policy portfolio is still my current portfolio because I haven't done

any tactical trades.

Now when I go to Week 2 though, I will start to notice some differences.

Now I see my international equity slice as well as my bond portfolio

has gone down from 30% in my policy portfolio to 20% here.

Just to show you very quickly, if I go to Week 3,

which hasn't even finished yet, I don't get a correct answer.

Because I haven't priced in the Price Inputs page the end of Week 3 yet.

Additionally, there is a place in the final report for you to copy and

paste your current portfolio allocation at the end of the simulation.

And that is right here on page one in the middle of the page.

If you'd like to copy one in every week you're certainly welcome to do so.

If you'd like to wait until the end, that's fine as well.

I hope you enjoyed doing your behavioral analyses and

continuing to invest in your sim portfolio.

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