Investclub

=Welcome to the King MS Investment Club=

In order to be a successful equity investor, you need to do the following:

 * ===work hard - you are competing against smart people===
 * ===Develop a plan (//I did this for you//)===
 * ===How much money will you invest/risk?===
 * ===How bullish are you?===
 * ===How many stock positions will you hold?===
 * ===How will you manage risk?===
 * ===Understand how to analyze a company and its stock===
 * ===how to research a stock thoroughly?===
 * ===how to search for new stock ideas?===
 * ===how to "stress test" an existing position===
 * ===What types of companies will you invest in?===
 * ===What is your edge?===
 * ===Understand when to buy a stock===
 * ===Figure out what a stock is worth?===
 * ===At what price will you enter the trade?===
 * ===At what target price will you close the trade?===
 * === Track your performance statistics ===
 * === Batting average (percentage of winning trades out of all positions) ===
 * === Average gain (average gain of winning trades) ===
 * === Average loss (average loss of losing trades) ===

Each stock idea
.

__**Portfolio Management**__
===This is a live portfolio of 5 long stocks and 5 short stocks. The five stocks are in different industries for diversification. This type of investing is known as a "// market neutral //" portfolio because it eliminates the effect of the overall market movements. Eliminating market movements has advantages and disadvantages. It is a drawback because the market generally moves up over time. It is an advantage for our purposes because the performance is solely based on the stock picking prowess of our students.===

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===Placing a bet against a stock (known as "shorting") is riskier than buying stocks (known as being "long"). As a result, the portfolio has a collar, which means that the overall portfolio value will not change by more than a certain percentage (up or down). Said differently, we cannot make or lose more than a certain amount. This "amount" varies by individual stock and market conditions (primarily volatility and option premiums).===

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===The collar is created by purchasing out-of-the-money puts and selling out-of-the-money calls. In our case, the expiration month will be near the end of the trimester, since we will donate any gains to the 8th grade. The put are a form of insurance and insurance costs money. We reduce the cost of the puts by selling the call options. The drawback of selling the calls is that it limits your upside (a nice problem to have). You don't have to sell the call options, but you could lose money if the market is flat (i.e., does not go up or down). So, we want the insurance, but we don't want to pay very much for it.===