Let's say you have $100,000 to invest, and you want to buy 100 shares of Apple at $91 per share.
You have 91 * 100 = $9,100 invested in Apple, and 100k - 9100 = 90,900 remaining to invest in the 4 other stocks.
Let's say, instead, that you want to invest 20% into Apple. $20,000 / $91 = 219.78022 shares. You can't buy fractions of shares, so you either spend a little more to buy 220 shares, or spend less to buy 219 shares.
So let's say you buy 220 shares @ $91 = $20,020 on "Day 1" of your investing project. The next day the closing price is $91.25. Your investment in Apple is now worth: $91.25 * 220 = $20,075.
Your one day return is: (end value / begin value) - 1
(20,075 / 20,020) - 1 = 0.00275, or 0.275% , compare this (actually compare your total portfolio return) to the return on the S&P 500 index for the day, calculating it's return the same way.
On the third day, the price falls to $89.89, your investment in Apple is now worth $89.89 * 220 = $19,775.80
Your one day return is: (end / begin) - 1 = (19,775.80 / 20,075) - 1 = (0.01490) , or (1.490%)
I've used the example of only one stock here. You want to add up the values of all the stocks you've purchased and use those figures. E.g. let's say on day one you are able to fully invest the $100k.
On day two: (value of stock 1 * # of shares of stock 1) + (value of stock 2 * # of shares of stock 2) +...+(value of stock 5 * # of shares of stock 5) = Sum Day 2.
return: (Sum Day 2 / $100k) - 1 = return in decimal form (multiply by 100 for % return)
on day 3: (Sum Day 3 / Sum Day 2) - 1 = return in decimal form
etc.
Compare to ...S&P500 index daily return
Note that unless you "sell" the number of shares you own does NOT change from day to day.
I hope that helps. Be sure to confirm with you teacher whether or not you are able to "buy" less than a full share. That's what you friend's 2285.0614 means. S/He "bought" 2285.0614 shares. Typically, you can only buy full shares in this type of exercise, e.g. 2285 or 2286 shares. Any money left over is cash, e.g. if you can't invest the full $100k you might have some cash left - a few dollars - it depends.
Reread your homework assignment. I suspect the professor gave you a dollar amount to start with.
Okay so we have to use excel, select 5 stocks from the S&P 500 and watch them everyday. I am using yahoo finaince.
The criteria we use on excel are
Name of stock
Buy price
# of shares
Market price
Closing price
My question is specifically with # of shares. Is this how many shares I purchased? The thing is when I look at my classmates work i see something else.
Ie)
Buy price = 35.01
# of shares = 2285.0614
Market value = 80,000
Where the heck did he get # of shares? If you select the amount why is it a decimal?
The professor also said Please keep track of the daily performance of your portfolio and compare it to the return on the S&P 500. Your objective is to outperform the S&P 500 Index. You should keep a daily record and begin to graph the value of your portfolio relative to the SPY.
Can someone please explain this to me and how to do it?
