DALL-E generation, "Here's the cartoon depicting the topsy-turvy world of stocks and cryptocurrency within the tech market, designed with a whimsical and colorful style on a white background."

Market Analysis

For our final project in Business 101, we bought $25,000 worth of virtual securities in a market simulation. This is how I did, along with my reasoning, and my research into why the stock performed as it did. (Image generated by DALL-E.)

Stonks!

In Jan. 2024, as part of my Business 101 class assignment, I purchased $20,122.64 in common stocks and $4,630.74 in cryptocurrency. As of today, Sun. March 17, my portfolio is valued at $31,957.81, a percentage return of 27.83%. Not bad for a beginner. I invested in 20 shares of Apple Inc. (AAPL), one share of Advanced Micro Devices Inc. (AMD), five shares of Costco Wholesale Corp. (COST), 4 shares of Danaher Corp (DHR), 10 shares of Meta Platforms Inc. (META), 10 shares of Micron Technology Inc. (MU), 10 shares of NVIDIA Corp (NVDA), and 20 shares of The New York Times Company (NYT). I sought to diversify my holdings by purchasing stocks representing ownership in local companies and tech companies whose products I have used and am familiar with. I kept a hands-off attitude throughout the quarter, more interested in watching how the AI boom effected my holdings than I was in maximizing my earning potential.

For the 20 shares of Apple Inc (AAPL) stock, which I purchased at $194.42 per share and today is trading at $170.73 per share, a loss of $473.80 or 12.18% of the value I purchased them for. My current holdings are valued at $3,414.60. According to a CNBC article in January, Apple’s stock was downgraded to a price target of $160, though it is still currently holding at $10 per share above that. Apple’s stock price was downgraded by Barclay’s based on “lackluster” sales of its recent iPhone model and fears that Apple’s services business would see “decelerated growth”. With Apple struggling in China and Europe over the Digital Markets Act, it is surprising that Apple’s stock is performing as strongly as it is.

My sole share of Advanced Micro Devices Inc. (AMD) was purchased for $167.86 and today is trading at $207.39, a gain of $39.53 or 23.55% of its original value. My one and only share represents the entire value of my AMD holdings for a market value of $207.39. AMD builds powerful microprocessors that are used in the training and running of artificial intelligence systems. According to The Motley Fool, AMD stock is rising with the gains of the artificial intelligence market in general, and on its contracts to supply chips to Microsoft and Meta in particular. The same article notes that AMD is also a supplier of parts for the general personal computer market, and as such, experiences growth due to that market’s growth as well.

My 5 shares of Costco Wholesale Corp. (COST) were purchased for $692.62 per share, have gained value, and now sell for $725.56 per share. My total gain was a reasonable $164.70 or 4.76% of the value I purchased them at, for a total value of $3,627.80. Motley Fool has listed Costco as one of their 10 stocks to buy for 2024, suggesting it could reach $1000 per share by year’s end. The article attributes their optimism to Costco’s recent strong sales growth, as announced in its March earnings update, and the recent 3:1 stock split by competitor Walmart in February.

As to the 4 shares of Danaher Corp (DHR), I actually don’t remember purchasing these shares, but it appears to have been a savvy buy, as what I purchased for $231.62 per share is now worth $253.69 per share, for a total of $1,014.76. The total holding gained $88.28 or 9.53% of its initial value. According to Business Insider, the biotechnology, diagnostics and life sciences provider Danaher was given a Buy rating by an analyst at Citibank, based on a generally recovering market for its products and on its earnings statements made to stockholders.

The purchase of 10 shares of Meta Platforms Inc (META), at the price of $382.49 per share, netted me $1,234.60, a gain of 32.28%, raising the total value of my META holdings to $5,059.50 this quarter. Shares of META trade for $505.95 today. According to The Motley Fool, Meta made bets that investing in products like augmented reality and artificial intelligence, two areas where Meta has made significant investment. For instance, they posted “a $16 billion operating loss in its Reality Labs business.” Despite these losses, again according to the Motley Fool, the strength of the stock is based on Meta having issued a dividend in the 4th quarter of 2023, while taking a profit margin of 29% on a net of $39 billion in income the same year. Making investments and still earning money? Sounds like a well-run business.

I invested in local computer memory chip producer Micron Technology Inc (MU) to the tune of 10 shares at a cost of $89.28 a piece. Today, each share sells for $97.62, bringing the value of the shares in my portfolio to $976.20, a gain of $83.40 all told, or 9.34%. I remember this being a poor performer when I purchased it, and according to The Motley Fool, I wasn’t wrong. In the final quarter of 2023, MU “revenue fell 49%,” according to the article. Micron was also hampered by a “massive collapse in memory prices,” in 2023, the article says. Micron makes memory for PCs and data centers such as the kind necessary to run big artificial intelligence models, according to the article, and this is the likely cause of Micron’s reversal of fortunes.

The big winner in my portfolio was NVIDIA Corp (NVDA). I purchased 10 shares in January at the ridiculously overvalued price of $599.57 per share, I remember thinking. Jensen Huang, NVIDIA’s CEO, told the Guardian the reason the stock is going up so fast is because AI technology has reached a,“tipping point.” NVIDIA makes video cards that are primarily used in the processing and training of personal as well as large corporate AI models. The article also credits, “low and stable energy prices,” while noting that energy prices are also a danger to long-term success, should price trajectories shift drastically, which is always a threat. My initial stake in NVIDIA soared 45.98% to $8,752.80, or $875.28 per share, for a gain of $2,757.10. Simulated drinks are on me!

Finally, the biggest loser in the batch is The New York Times Company (NYT). I purchased 20 shares of NYT at $48.17, which plummeted 10.13% to $43.29 per share, a loss of $-97.60. I’ll probably hang on to the $865.80 stake, which could plummet further if their lawsuit accusing OpenAI of copyright violation is thrown out of court, if OpenAI gets their way. According to Yahoo! Finance, NYT also struggles to prevent clones of its recent Wordle game acquisition from undermining its market. According to Yahoo! Finance, while subscriptions are up, advertising revenue is on the decline.

Cryptocurrency

Lastly, I purchased 2 Ethereum coins, at a price of $2,315.37 each. These appreciated 68.72% to $3,906.58, for a total of $7,813.16, and a profit of $3,182.42. According to The Atlantic, “Crypto’s staying power is a consequence of its design.” The author lists possible reasons that its design allows for uses that government-backed currencies would normally make more difficult, such as crime. The author suggests crypto doesn’t have the same social cache as gold, diamonds or expensive cars, but I would suggest that the social cache of cryptocurrencies is absolutely one of its appeals, though writers who publish their work in The Atlantic are not part of the social clique who would be impressed by ownership of cryptocurrency. This article from FXStreet suggests that cryptocurrency is a market driven by different values than traditional stock markets. Their reasoning is opaque to me, but they talk about “psychological level”s, profit-taking, and “alt seasons”, which show that the market has similarities to traditional trading, but also its own set of internal rules.


Posted

in

by

Tags: