General Body Meeting 04-25-12 1. Mutual Investment Club of Cornell Welcome 2.
Investment Club Meeting
description
Transcript of Investment Club Meeting
Investment Club Meeting
May 2nd, 2014
Agenda
1. Market Update
2. Portfolio Hedging
3. The End
Market update
*Minimum wage debate
Senate started discussion about raising minimum wage to $10.10 from $7.25
Effects
Effects large employers of minimum wage workers eg: consumer discretionary companies like McDonalds
Short-term vs Long-term
Mon
Exports in Asia
Combined export slid 3% in 1st three months
Cheap labor pushed them to the forefront of factory production
Overall growth is slowing
Different US recovery: investment in oil & less consumption (higher manufacturing costs in Asia)
Mon
China, Japan, Taiwan, Korea
Siemens vs GE for Alstom (power turbine industry)
Complements power generation operations
Market-Portfolio watch
Mon
Seriously, BofA?
March, shareholders happy about dividend increase & buyback
Joke! Resubmit for error in allocation = 4B reduction in capital
Stock got pushed down 6.3%, largest one day plunge since 2012
Tue
“Markets Brace for Return of El Nino”
Tue
• Analysts predict that special commodities: coffee, soy beans, sugar, global food prices• Food prices may affect to stock market behavior
Showing a little life
The Dow rose 0.3% on Thursday (approx 4 points above Dec 31)
Has risen < 0.1% 2014
Slow down in corporate earnings growth
S&P Utility is outperforming
Up 14% before dividend payments
Thur
Economic ‘stunted’ growth
First quarter shows poor growth
GDP grew at ‘seasonally adjusted rate’ of 0.1% 1st quarter
Fed still voted for bond buy back 10B/month
Purports: harsh weather, blocked exports, pent-up demand
“watch, plan, wait” mode
Continue to keep interest rates near zero even after program ends
Summer Hedging
Risks:
-We cannot touch the portfolio over the summer
-If the market tanks, we can't sell our stocks to cut losses
Solution:
-Stop-Loss Orders
-Sell our stocks if they drop more than 10%
Symbol Name Beta
MFC MANULIFE FINANCIAL CORPF 2.35
BIDU BAIDU INC 2.05
DNR DENBURY RES INC NEW 1.86
CAT CATERPILLAR INC 1.81
JPM JPMORGAN CHASE & CO 1.71
GS GOLDMAN SACHS GROUP INC 1.69
JAH JARDEN CORP 1.64
GE GENERAL ELECTRIC COMPANY 1.6
EXPE EXPEDIA INC NEW 1.58
SCCO SOUTHERN COPPER CORP 1.56
Put Stop-Loss Orders on:
MFC, BIDU, DNR, CAT, JPM, GS, JAH, GE, EXPE, SCCO to sell if they drop 10%
Hedgin
g With
ETF
s
What is Hedging
Dictionary.com: “To enclose with or separate by bushes or low trees: to hedge a garden”
Taking an offsetting position to limit the risk.
ETFs
Exchange Traded Funds
Used for: Speculation Hedging
Hedging with ETFs
If we invest in inverse SP500 ETFs, we limit the market exposure.
Hedging with ETFs
IC Portfolio:
Beta = .98Using inverse SP500 ETF: Portfolio Beta = .84
Using double-leveraged inverse SP500 ETF: Portfolio Beta = .77
CLOSING REMARKS
SeniorsPresident- Tim Simon
VP- Annalaura Linder
Market Analyst- Ryan McCormick
Analyst- Sean O’Toole
Treasurer- Brendan Gover