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FNCE 6330 – Fall 2012
Class portfolio project, part I
Due: August 27
Blackboard folder: Project, Parts I&II\Portfolio Project, part I

This project has three goals. The first is to compare (contrast?) the investment practices of eight legendary investors to the theoretical methods considered in this class. The second is to give you an opportunity to work with real data, albeit over an unrealistically short time horizon. The third and most important goal is that the investor and stock selection process be interesting and fun. Please do not let it turn into a huge time commitment. The assignment is as follows.

Part I
1. Go to the Project folder on our website. There you will find links to the biographies of 8 legendary investors. The chapters describing the investors come from John Train's books, The Money Masters and The New Money Masters. Browse the investor profiles and select an investor that interests you.

2. Read the chapter that describes your chosen investor.

3. Choose one stock that reflects your investor's stock selection style. Links to helpful stock-screening websites can be found in the Webliography on eCollege or External Links on Blackboard. Your stock's price must be reported on the Yahoo! Finance web site (link in Webliography or External Links) and have weekly price data going back to July 5, 2011. 4. Go to finance.yahoo.com and download the weekly price series for your stock. To do this, enter your stock's ticker symbol in the ‘Get Quotes’ box on the Yahoo! Finance home page and click on Go. Click on the link to Historical Prices on the left-hand side of the page, as shown in the graphic below.

Select July 5, 2011 as your Start Date and select weekly returns. The head will look like the following (except that your ‘End Date’ will be different, since you will be acquiring the data later than my writing the assignment).

Click on the ‘Get Prices’ icon. Scroll down to the bottom of the data, where you’ll find a link that allows you to download the data as a spreadsheet. Make sure that the last observation is for July 5, 2011. Note: the file is saved as a csv file (comma separated variables), but it can be opened by Excel. (Save the file to a disk, open Excel, click on the ‘Open’ icon, in the ‘Files of type:’ box select ‘All files’, then select the downloaded file and open it. Please save it as an Excel file using Excel’s ‘Save as’ function (or you will lose half a point). Alternatively, you can elect to open the file directly from the download, then save it as an Excel file.

To find your stock’s beta, click on Key Statistics under Company (also on the left-hand side of the page) and scroll down to ‘Stock Price History’ on the right side of the page.

If Yahoo does not report your stock’s beta, go to http://www.reuters.com, select Markets>Stocks, type in your stock ticker symbol, then select ‘Financials’ and scroll down to Valuation Ratios. You’ll find a beta there, too. (Don’t be surprised if it’s different than Yahoo’s beta. Different market proxies and/or different estimation periods often yield different betas.)

5. On August 27, submit a one-page memo that gives the name of the company you selected, its ticker symbol, and its beta. In your memo, briefly explain why you selected the investor you did and then describe his style and the stock screens (if applicable) that you used to emulate it (e.g., stocks with P/E ratios less than 15 and/or dividend yields greater than 3%). In addition, post an Excel worksheet (.xls or .xlsx) that contains your stock's weekly price series (dates and adjusted weekly closing prices), its beta, and its ticker symbol.

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[ 1 ]. If you have a stock screener that you are particularly fond of, and if it’s available for free, please post it to the Webliography or send it to me and I’ll post it to External Links.

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