Summary

It’s time to decide on how you’d like to construct your portfolio. Whether you decide to invest virtual money or real funds, you should now have a basis to create your own thoughtful plan and strategy. Using your virtual portfolio and trading ability, you can test your strategy and “tweak” it, if necessary, to achieve profitable results in both the virtual and real world.

Glossary

Diversification:
A way of reducing the risk and variances in your portfolio returns by buying a variety of stocks across different industries, market caps, etc.
Peter Lynch:
Past portfolio manager of Fidelity Magellan, which became the largest mutual fund in the 1990s.
Risk:
The expected variance of the returns of your investments.
Sharpe Ratio:
A measure of the success of your portfolio by considering its return and its variance.
Warren Buffet:
Chairman and CEO of Berkshire Hathaway, and generally regarded as the greatest buy and hold investor of the last 30 years.

Further Reading

Exercise

Make a list of stocks that you are interested in. Identify their industry, market cap, and dividend yields. Now build a balanced, diversified portfolio of at least 10 stocks on your virtual account. Make sure you have with a selection of stocks from different industries, market caps, dividends, and countries.

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