Investment Strategy

Investment Strategy

The primary long term investment goal I seek to achieve with my portfolio is capital preservation with slight capital appreciation. I chose to invest primarily in large scale domestic firms that have expanded internationally as these companies have minimal risks at entirely shutting down across the span of twenty years—at the very least there would be significant red flags to warn me of such a disaster. With America maintaining its strength in the international marketplace, I predict that it will continue to be a powerful economic force over the years. Since these companies won’t likely receive large increases in the rate of return, they will likely maintain their value as money inflates and preserve the funds I used to invest in them for the future. Since I will be gainfully employed, I am not interested about the short term benefits of my portfolio; I simply want to preserve my prior and future capital against inflation.

Again, since most of these companies are large international corporations, the risk of investing capital with them is relatively low compared to tech firms like Twitter and Facebook, which can become easily outdated by new social sites and applications. I am willing to accept anywhere from five to fifteen percent losses from this portfolio in the long run, but I expect most of these firms to grow in the future or at the very least maintain their size.

My choices of stock diversification are important as they help further reduce potential risk of loss. Almost every firm is in its own industry or doesn’t cross paths with the other firms in their lines of business, ensuring that the collapse of a single corporation doesn’t reduce the values of the other stocks. None of the companies are directly dependent on the other corporations to function.

Financial Market Expectations

Since the economy is constantly evolving as technology continues to develop and expand into new industries, there is no doubt that companies that utilize or revolve around technology will continue to thrive. For example, the electric car industry is expected to become a powerful force in the next decade, as the main issue of expensive batteries for the cars is being overcome with improved production methods that reduce the supply costs. As electric cars become more affordable, their advantage of higher equivalent mileage to conventional cars will drastically increase their demand, which is why I invested in Tesla, a leading firm in electric cars. (cite tesla) The biopharmaceutical industry is also booming with increased implementation of virtual services that weren’t available until now. (cite)

While technology grows and becomes more available, assets are necessary to implement and own these new products. This is where financial institutions such as MasterCard and Bank of America come into the picture, as they help grant individuals and corporations the funds necessary to obtain these new products. Since these mega banks are becoming the primary source of funding for corporations worldwide, their power and influence is only expected to grow over the years as smaller banks die out. (cite banks)