Portfolio Strategy Research Paper

Excerpt from Research Paper :


Over the last several years, the markets have faced a tremendous amount of volatility. Part of the reason for this, is because the global financial crisis and subsequent recession caused the Dow Jones Industrial Average to decline to 6,547. Then, it would climb over 68% to cross above 12,000. This is important, because it is showing how there are tremendous opportunities for investors. However, in order to attain above average returns requires that you are using a strategy that is: embracing growth and minimizing risks as much as possible. To achieve this objective requires having: an asset allocation strategy that will incorporate balance and value. Once this takes place, it will provide the greatest insights as to how we should structure a portfolio that will maximize the total return investors are receiving in the year ahead.

The Portfolio Philosophy

The basic strategy that we will be using is to purchase those companies that can provide: consistently increasing earnings and stability in the numbers they are delivering. This means selecting investments that will more than likely be: selling at significant discounts and looking at the company's ability to consistently pay their dividends. When we are looking for stocks that are selling for large discounts, we are seeking out those businesses that have seen a selloff in their share prices. As many investors have assumed that future prospects are so bad that they no longer are willing to own the stock at any price. This is when you can find good long-term valuations. The basic criteria that we will use for finding any kind of company that will fit into this category include: those companies that are gaining market share, there are growing profit margins, there is a steadily increasing ROE, there are low amounts of debt and they have consistently increasing earnings per share. (Sander, 2011)

The ability to consistently pay dividends is when are looking at the dividend policy of the company. Dividends are important, because they require actual cash being paid to investors. This means that by tracking their ability to consistently disburse them over the course of several years, will tell you about the underlying financial strengths of the company. When you put these elements together, they will help you to find those stocks that can provide: above average returns, have accelerating earnings and stability. (Sander, 2011)

The Strategy

To provide superior returns and minimized risks we have selected several stocks that should be purchased in the portfolio. The most notable includes: Phillip Morris, Newmont Mining and Nue Core Steel Holdings. Phillip Morris (PM) was selected because the company has: consistently increasing earnings growth of 15.4% per quarter, they have paid a consistent dividend going back over 20 years and they have low amounts of debt. This is important, because it is showing how this stock will: provide stability and a consistent return to the portfolio. (Standard and Poor's, 2010)

Newmont Mining (NEM) was selected, because they are one of the largest gold producers in the…

Sources Used in Document:


The China Fund. (2011). Yahoo Finance. Retrieved from: http://finance.yahoo.com/q/ks?s=CHN+Key+Statistics

Fidelity U.S. Treasury Money Market Fund. (2011). Fidelity. Retrieved from: http://fundresearch.fidelity.com/mutual-funds/summary/31617H300

Sander, P. (2011). The 100 Best Stocks. Adams, MA: Avon Media.

Standard and Poor's. (2010). Standard and Poor's 500 Guide. New York, NY: McGraw Hill.

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