Is this a good return? Watch

Nimiza
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#21
Report 7 years ago
#21
(Original post by TheArsenal)
Hi im an AS level economics student and in our class we had to invest in shares in the FTSE 100 earlier in the year, with the person who makes the most getting a prize.

It is set to last until July, starting in Feb and currently i have made 6.2% investing in 6 companies. I have had 74 days so far and was basically wondering if this was a good attempt for someone who has never done this before and never really loooked at the markets. It was of course virtual. Thanks.
You need to adjust these returns based upon risk, and vs. a benchmark.

e.g. 6.2% would be an excellent return is the market as a whole (say the FTSE100) stayed about the same over this period. Conversely, if the FTSE100 went up by 10%, and you only produced 6.2%, then it's not so good...

Similarly, you need to look at how much of this was beta, and how much was alpha. If you're dealing with sensitive and volatile stocks (high beta), you can get great returns, similarly if things go wrong they can go very wrong: you bear extra risk.

As a side point, you mentioned you "liked" various stocks due to the company being good etc. You can't just "like" a stock, you have to "like" it at a certain price. It could be the best company in the world, but if it's overvalued you still shouldn't buy!
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TheArsenal
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#22
Report Thread starter 7 years ago
#22
(Original post by Nimiza)
You need to adjust these returns based upon risk, and vs. a benchmark.

e.g. 6.2% would be an excellent return is the market as a whole (say the FTSE100) stayed about the same over this period. Conversely, if the FTSE100 went up by 10%, and you only produced 6.2%, then it's not so good...

Similarly, you need to look at how much of this was beta, and how much was alpha. If you're dealing with sensitive and volatile stocks (high beta), you can get great returns, similarly if things go wrong they can go very wrong: you bear extra risk.

As a side point, you mentioned you "liked" various stocks due to the company being good etc. You can't just "like" a stock, you have to "like" it at a certain price. It could be the best company in the world, but if it's overvalued you still shouldn't buy!
Ye thanks for the info mate, by "like" i didn't mean i thought the company was good i mean't i liked the price
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gpugh1
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#23
Report 7 years ago
#23
Well a good way is to look at other companies in the industries of the companies your invested in.

If they perform better than the average in the individual industry, then yes that is good return.
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drexelburnham
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#24
Report 7 years ago
#24
(Original post by TheArsenal)
Sorry im an amature, what does forex mean? And is there an actual calculation to work out the risk involved? cheers

Standard Deviation.

Maybe do a bit of reading on the topic 'Portfolio Theory'
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