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Week 1 Trades

In this week was the first time ever trying to understand how to use the

Morningstar Program. However, we had to create a passive Portfolio where we

purchased ETFs of US large cap stocks for actively managed portfolio.

Diversification was the main aim and 8 ETFs were purchased under each asset

class, the percentage of funds that is deemed most heavily allocated were

purchased. The asset allocation guide given is US Large Cap Stocks 40%, US

Small Cap. Stocks 10% non us stocks 20%, Real Estate 3%, Commodities

including currencies3% and cash and equivalents 4% as followed.

However, when researching on past performance of the ETFs and P/E ratio were

used to analyzed the future forecast of the stock. Each asset class consisted of a

mixture of ETFs in the large and small blends categories. The strategy was to look

for the ETFs that were known to perform well.

The most important realization gained about this week is that the market is very

uncertain and there is no way of having a perfect choice of stock and ETFs based

on historical performance. There is no way to ensure that all asset class chosen
will provide maximum returns neither choosing them with high R2 values as well

high betas.

Week 2 Trades

In this week no additional stock was bought or sold from the passive portfolio.

Two ETFs were purchased from the Non US stock asset class for the actively

managed portfolio. Those ETFs were FLJP and FLN from Japan and Latin

America and shares were purchased in small amounts. The reason for this is that

under the Non US Stock comes with an extra cost and target foreign currency that

when those markets make losses the money turns into US dollars.

Under the actively managed portfolio the two worst ETFs performance level when

it came to gains and losses was ASET and FLN. However, the passive portfolio

fluctuated between gains and some slight losses amongst the different asset classes.

The most important insight gained for this week surrounded the stop loss

technique, and the realization on how the prices can change at any point of time.
Week 3 Trades

In this week ETFs purchased was from fixed income for the actively managed

portfolio with a target at 15%. Those two ETFs are FXO and BIZD where we

analyzed and monitor fixed income securities and portfolios. Under the active and

passive portfolios, they all had gains which was great.

The fixed income portfolios usually consist of investment securities that pay a

fixed interest until the maturity date. They also work closely with client portfolio

managers to understand restrictions and unique goals

The insights of this week was that both the passive and actively passive portfolios

had good gains and returns.

Week 4 Trades

There was no buying or selling of stock in this week because we had to monitored,

rebalance, turnover portfolios that was bought purchased. This was the final week

to purchase stock for the actively managed portfolios and stocks of your own

choice.

In the actively managed portfolio most of the stocks were gains and 3 ETFs had

losses. Those ETFs were AVUS, BIZD and FXO that declined in purchase price.

Meanwhile, the passive portfolio fluctuated between the different asset classes and

only had four gained returns.

Week 5 Trades

There was no trading done in this week, so I watched the portfolios rise and fall

and by week end they only had gains.

Week 6 Trades

Three individual stocks were to be bought after selling the appropriate ETFs and in

and out of the money calls were to be purchased for each. This week great insight

was gained.

A call option gives the holder the right to buy a variety of shares of a company

such that if a stock is trading at $11.50 a share, then the $14 strike price call option

is currently "out-of-the-money."

However out-of-the-money options are less expensive than in-the-money options.

This is simply a function of the fact that there is a lower probability that the stock

will exceed the strike price for the option. However, for the same reason, out-of-

the-money options for a nearer month will cost less than options for a further-out

month
Week 7 Trades

This week some more stocks of choice was purchased, where it came to a

realization that the stocks target was 25% and a protective put. Those ETFs

purchased was FLLA, FJLP and FLN.

The most important insight gained this week was the protective put technique and

covered call technique. A protective put technique allows investors to guard

against the loss of unrealized gains. The put option acts like an insurance policy,

and it costs money, which reduces the investor's potential gains from owning the

security, but it also reduces the risk of losing money if the security declines in

value. For example, if an investor purchased a stock for $15 that is now worth $23

but he did not sell it, he has unrealized gains of $8. If he doesn't want to sell the

stock yet but he wants to make sure he does not lose the $8 in unrealized gains, he

can purchase it for that same stock that will protect him for as long as the option

contract is in force. If the stock continues to increase in price the investor can

benefit from the increase. If the stock declines the investor is able to limit his

losses because of the protective put.

In conclusion, this week was spent understanding more about the insights of the

actively managed portfolios and their targets.

Week 8 Trades

This is the final week of trades which consisted of the closing off of all short

positions and rebalancing the portfolio within the asset allocation guidelines.

The most important insight of this week is that the positions can be closed for a

number of reasons in order to take profits or stem losses, generate cash, reduce

exposure and so forth. Closing off short positions would involve purchasing it

back. The difference between the price at which the position was opened,

represents the gross profit of loss on that position.

At the end of the week both portfolios would have produced positive returns.