Portfolio Management (FINA 401)

Portfolio Management (FINA 401)

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Portfolio Management

(FINA 401)

Simulation Group Project


Project Description


Working in groups of no more than 4 students, you will manage (fictitiously) a stock portfolio initially worth US$ 1,000,000 over an 8-week period. You will pick stocks, and then track the value of your portfolio and possibly rebalance your portfolio over the course of the semester. You should track the value of your portfolio at least once weekly and report stock prices, portfolio value and major indices. You should also keep track of the main financial news events that affect the value of your portfolio over the investment period (using the Internet and/or any newspaper/magazine of your choice). Student will use the Stock-Trak Portfolio Simulation program (www.stocktrak.com) to manage and track their investment portfolio.



You will need to select an investment objective carefully. To inspire you, I suggest that you take a look at some mutual fund descriptions available on the web, for example at www.fidelity.com (that gives you access to detailed information on several thousand funds, via FundsNetwork). The Internet has a tremendous wealth of useful information: e.g., money.cnn.com, bloomberg.com, quicken.com.


The composition of your portfolio should reflect your investment objective, as well as your outlook on the current state of the economy and individual securities. You can rebalance your portfolio following news and/or market fluctuations, but I do not require that you rebalance your portfolio over the course of the semester. In any case, you will need to justify your trades (or the fact that you chose not to trade after the formation of the portfolio).


Your portfolio will consist of regularly traded US equities. You will be charged a flat commission of 10 USD for each trade. Total number of transactions is limited to 200 over the simulation period. You may buy on margin and sell stocks short, but it is by no means necessary to do so. For simplicity, the short term interest rate (at which you may invest any cash that is not invested in stocks, and borrow to buy on margin) will be assumed to be constant and equal to 0.01% per day.

I understand that the task of picking a portfolio may seem daunting at first, but there are a lot of free, helpful resources on the Internet:

  • finance.yahoo.com (and surely many other places) has “stock screeners” that allow you to select stocks on the basis of criteria you choose.
  • mutual funds descriptions with a lot of detail, including funds’ main holdings, are readily available on the Internet (for example on Fidelity.com).
  • numerous places offer “top picks” lists.


Feel free to use all of these tools and information. This is not cheating, as long as you can justify your choice of holdings in your own words


You are free to organize your work so as to make it as interesting as possible, but you should probably include the following:

  • Your investment objective (our objective: growth, capital appreciation, capital gain) & strategy ( our strategy large market capitalization and large blend)
  • The initial composition of your portfolio (with a detailed justification)
  • Your additional trades if you decide to make any transactions (with justification)
  • The main economic and financial news that affected the value of your portfolio
  • Do you think you were consistent with your objective?
  • What would you do differently based on what you learned from this course or the recommended readings?


You may want to use the notions discussed in class (or notions that I will likely not have time to cover but that are described in your textbook and recommended readings). You should be aware that I particularly appreciate conciseness and clarity of style.

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