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Investment Club Meeting

Investment Club Meeting. May 2 nd , 2014. Agenda. Market Update Portfolio Hedging The End. Market update. *Minimum wage debate. Senate started discussion about raising minimum wage to $10.10 from $7.25 Effects

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Investment Club Meeting

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  1. Investment Club Meeting May 2nd, 2014

  2. Agenda • Market Update • Portfolio Hedging • The End

  3. Market update

  4. *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

  5. 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) China, Japan, Taiwan, Korea Mon

  6. Market-Portfolio watch Siemens vs GE for Alstom (power turbine industry) Complements power generation operations Mon

  7. 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

  8. “Markets Brace for Return of El Nino” • Analysts predict that special commodities: coffee, soy beans, sugar, global food prices • Food prices may affect to stock market behavior Tue

  9. 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

  10. 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

  11. Summer Hedging

  12. Risks: -We cannot touch the portfolio over the summer -If the market tanks, we can't sell our stocks to cut losses

  13. Solution: -Stop-Loss Orders -Sell our stocks if they drop more than 10%

  14. Put Stop-Loss Orders on: MFC, BIDU, DNR, CAT, JPM, GS, JAH, GE, EXPE, SCCO to sell if they drop 10%

  15. Hedging With ETFs

  16. 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.

  17. ETFs Exchange Traded Funds Used for: • Speculation • Hedging

  18. Hedging with ETFs If we invest in inverse SP500 ETFs, we limit the market exposure.

  19. Hedging with ETFs IC Portfolio: Beta = .98 • Using inverse SP500 ETF: Portfolio Beta = .84 • Using double-leveraged inverse SP500 ETF: Portfolio Beta = .77

  20. CLOSING REMARKS

  21. Seniors President- Tim Simon VP- Annalaura Linder Market Analyst- Ryan McCormick Analyst- Sean O’Toole Treasurer- Brendan Gover

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