Free Finance Essay Example

Forecasting Share Price and Alternative Investments

Expected Future Price
The stock of the company is at present trading at $126.41, while it has already touched the 52-week high range of $133.60/share. Important to note that just before the announcement of its first quarter result, stock was trading at $109.51/ share, and with the company announcing blockbuster profit of $18 Billion and sale of 74.5 million handsets, stock price rose to $114.83/share. Thus, we believe that the price of the company is moving fundamentally and not on any speculation.
As for the future price, 1 year down the line, we expect the stock price to breach $200/share, as the ultra-loyal customers of Apple are waiting for Apple Watch this April, and since much hype has already been created among the tech-savvy world for this product and how equally efficient It is just like other Apple products, we can expect the price to continue its bullish trend even after official launch of the product .
Post this event, Apple is rumored to be gearing up for launch of Sapphire glass IPhone this September. The consumer industry is waiting for a touch screen smartphone, and this might be the perfect solution for the tech-geeks and IPhone lovers.
Thus, we firmly believe that in the time span of one year, the price of stock will be above $200/share, surging 58.73% from current levels. Hence, portfolio of 100 shares of Apple will be valued at $20000 in total.

Past performance of the stock

The graph below indicates past 5 year performance of the stock:
We can witness from the graph above that it was only during 2012-2013, stock price experienced a fall which can be attributed to delayed launch of IPhone 5 series. However, post that period, the stock has been rising consistently. Below are the past 1, 3 and 5 year return of the stock;

March , 2012: $80.79

March ,2010: $31.67
1 year return: (126.41-75.25)/75.25
= 67.98%
3 year return: (126.41-80.79)/80.79
= 56.46%
5 year return: (126.41-31.67)/31.67
= 299.14%

List of other alternative investments:

1)Mutual Fund:
An asset which is managed by an investment company with the purpose of collectively managing the pooled funds of group of investors which is then invested in stocks, bonds, money market instruments, depending upon risk-return profile of the pooled group.
2)Derivatives:
This is an alternative investment class that derives its value from an underlying asset, which may be an asset, index, currency or even interest rates. Some of the derivative instruments traded in the markets are, Future, Forwards, Options and Swap Agreements.
3)Hedge Funds
An investment class which strive to earn high absolute returns. Hedge funds are not constrained to the fact of mimicking the returns of an index or any other benchmark, and they seek to maximize the returns only. Most of the hedge funds are either in the form of limited partnerships or offshore corporations, and generally caters to investments of more than $200000 on an individual basis. This asset class carries significant risk and also high fees charged by the fund manager which comprise of standard fixed fee of 1% of assets+ incentive fee.

Comparing Saving Account Rate to investment in future:

My saving account rat offers interest rate of 0.75% per annum. Since, the interest rate is significantly low, it would be appropriate for me to take some risk and earn a better rate of interest on equity futures or other alternative investments.

Works Cited

Ciaccia, Chris. Apple Surges Following $74B Revenue Quarter, 74M iPhones Shipped. 27 January 2015. 5 March 2015 <http://www.thestreet.com/story/13025026/1/apple-surges-following-74b-revenue-quarter-74m-iphones-shipped.html>.
Historical Stock Price- Apple Inc. n.d. 5 March 2015 <https://in.finance.yahoo.com/q/hp?s=AAPL&a=02&b=6&c=2010&d=02&e=6&f=2015&g=m>.
Kaplan. "Alternative Investments." Inc, Kaplan. Schweser Notes for CFA Exam- Alternative Investments. USA, 2011. 245-257.