Table 1. Stock Portfolio
Market Watch (2013). Investing. Web.
For the given portfolio, the amount of $10K was used in order to invest into the stock and shares of the companies in question. It is noteworthy that, after the financial operations had been carried out, a sufficient amount of money was left for making further financial decisions. Among the other solutions that have been considered as an option for the given portfolio, the concept of diversification was chosen to be utilized.
The choice of the companies to invest in predetermined the necessity in the use of diversification. As one might have noticed, the companies listed above belong to completely different fields. With Sirius XM is widely known as a broadcasting company, Amazon is famous for its being a multinational e-commerce firm, FEDEX offers courier services, Sprint Corp. is an Internet carrier, and USAA deals with banking, it is extremely hard to handle the shares bought from each of the companies with equal competence. Therefore, an efficient system of diversification had to be adopted in order to make sure that the shares are going to remain profitable.
The means of diversification that have been used in the portfolio can be described as a vertical one. Indeed, when considering the companies in question, one is likely to find out quickly that they belong to different spheres of services. The choice of the diversification strategy was predetermined by the lower risk rates. Indeed, when buying the shares from the companies that facilitate the same sphere of services, one is likely to turn bankrupt once people start losing their interest in what the specified sphere has to offer. Consequently, the companies that are related to completely different branches of business have been chosen.
It is reasonable to stress, however, that the choice of the spheres that the companies belong to was deliberate and was based on the current trends within the business sphere, as well as the news regarding the recent technological innovations and the way in which the latter is going to reinvent society. Since modern society can be referred to as the information society, the effects of media on the business sphere must not be underrated; therefore, it was crucial that the shares of such a major broadcasting company as Sirius XM should be bought. The reputation of Amazon, as well as its customer base, has grown considerably over the past few years due to the surge in popularity of e-commerce, which will also open new opportunities for Amazon investors. The same reasoning can be applied to Sprint Corp. and FEDEX. Even though banking is much riskier than any of the above-mentioned spheres, the shares of USAA also seem rather promising, given its impressive beta of 0.55.
With regard to the aforementioned considerations, one can safely assume that the data, which the given portfolio incorporates, will lead the owner of the stocks and shares of the companies in question to a triumph. Even though a slight uncertainty in the field of banking can be expected, investing in the shares from the companies mentioned above is likely to bring considerable revenues in the nearest future.
Reference List
Market Watch (2013). Investing. Web.