NYU Stern

Professor Ian Giddy's Foundations of Finance

Portfolio Management Game

Downloadable Materials The Quiz Page Course Home Page Benchmark Portfolio Giddy's Resource Page

This project is intended to make you an interested participant in the financial markets, and so gain some understanding of the markets and of investment decisions. You will use a trading simulation program, Stock-Trak, to manage a portfolio that can consist of bonds, equities and/or mutual funds during the course. The goal will be to beat a passive $500,000 portfolio of 50% equities, 40% bonds, and 10% cash. Students will apply the concepts learned in the course to select which bonds, stocks or mutual funds to buy and which to sell, and to evaluate the relative performance of the portfolio.

For background, read Bodie, Kane and Marcus, Essentials of Investments, Ch 19 and Appendix A. Also Ch 11.

Rules of the Game

1. You have an initial $500,000 to invest in the securities of your choice. The goal is to beat a passive benchmark portfolio consisting of

2. Selections must be made by the second class and given or emailed to the instructor at portfolio@giddy.org. You may change your portfolio as often as you wish, but every transaction costs money. Changes must be made through Stock-Trak. You should remain fully invested. Keep your selections to 5-10 instruments. Keep track of your portfolio's performance on a weekly basis. Don't know where to start? Look at morningstar.com or lipperweb.com for some top-performing funds and fool.com for stock ideas.
3. Write portfolio performance reports, three brief (1-2 pages) on-paper reports. Use of a spreadsheet program such as Excel is recommended.
  1. First Report:
    1. for each security in your portfolio,
    1. For the whole portfolio,
  2. Second Report:
    1. For each security,
    2. For the whole portfolio,  your comparison should include an estimate of portfolio beta and the return-to-risk ratio.
  3. Third Report:
    1. For each security,
    2. For the whole portfolio,  your goal is perfomance analysis:
4. Grading will be based solely on the logic and consistency of your selections and reports. You will not be graded on the basis of investment performance; rather, you will be expected to:
A note on bonds
If you want to invest a certain dollar amount in particular bonds, you need to know the price. Stocktrak tells you which bonds are available for purchase on its "read the rules" section. You can find bond price quotes at bondsonline.com. This site enables you to quickly enter criteria (such as maturity in years for Treasurys, or the company's name for corporates) and get a price.

Go to Giddy's Web Portal • Contact Ian Giddy at ian.giddy@nyu.edu