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- Indicate the companies you are investing in: Select three (3) US companies that are publicly traded. Please use your knowledge and experience and pick, as many stocks as you’d like. Lastly, make sure you are practicing good diversification. Jim Cramer, Money Manger, on CNBC, plays a game at the end of his show called “Am I Diversified.” Check out a short clip to get a sense of industry diversification at https://www.youtube.com/watch?v=f3lDxexupcE.
- Sources of Information: There are many ways to find such companies and the stock prices, including the New York Stock Exchange at http://www.nyse.com, Google Finance at http://google.com, NASDAQ at http://www.nasdaq.com, and http://finance.yahoo.com.
- Indicate the amount you are investing in each company: Decide how you will divide $25,000 across the three (3) companies; e.g. $10,000 in Company 1, $10,000 in Company 2, and $5,000 in Company 3. You decide the amount you are investing in each company. You do not have to provide any analysis to justify your decisions. You must only provide some reason for picking that company. For example, you might invest in Ford because that company gets a lot of your money and you hear that Ford is doing well, and will continue to do well.
- Indicate the number of shares you are buying, and the price of the shares you are buying for each company: Once you decide the companies and the amount for each company, determine how many shares you can buy. If Company 1 is selling for $42.16, then you may buy $10,000/ $42.16, or 237.19 shares. But you cannot buy a part of a share, so you decide to buy either 237 or 238. In this example you buy 237 shares, at $42.16 per share, investing $9,991.92. You won’t be able to buy exactly $10,000, or $5,000, or $25,000, but it will be relatively close.