Judging Criteria
 
What's News at InvestWrite
InvestWrite News & Announcements   >Back to What's News  OR  View all News & Announcements

Previous Article Next Article

See A NATIONAL Winning High School Essay from Fall 2015!

Fall 2015 InvestWrite Grades 9 - 12           National Winning Essay

TO THINK ABOUT:

Evelyn Stevens, a former Wall Street professional, has won several US and European cycling races and is an Olympic contender. She says Wall Street is like pro-cycling, "‎It’s not a world you gradually go into…you’re operating on a high level quickly." Cyclists, like capital markets analysts, must evaluate conditions affecting performance, set goals, pace themselves, develop strategies and maneuvers to absorb change, and rebalance as necessary to stay the course and win.

WRITING ASSIGNMENT:

Research the job responsibilities of a capital markets analyst. Envision you are presenting to an analyst in this writing assignment. Discuss what you consider to be the most important characteristics of a long-term investment strategy. Select two investments. These can be your Stock Market Game portfolio holdings or other stocks, bonds or mutual funds.  Describe why these investments are part of your long-term strategy. Explain the analysis you used and your rationale for making your investment decisions. Like an analyst does, include your assessment of how these investments might be affected over the coming year by the national/global economic environment or by industry or corporate events.

Winning Student: Zachary Andrews
Winning Teacher: Julie Frey
Grade: 11th
Place: Manheim Township High School, Lancaster, PA

Zach's Winning Essay:

The Action-Packed Lifestyle of a Cyclist and a Capital Markets Analyst

The job of a capital markets analyst is a hard one. Trying to make a deal between an investor and a company is very stressful most of the time. It requires long hours, hard work, and lack of sleep. Just as a cyclist, one must work their way up the ranks, and hard work is an immense part of what allows people in both of these professions to achieve success. A cyclist must train hard to have success, just as a capital markets analyst must work hard in order have success to make deals go through. Capital markets analysts make decisions that affect the financial future of their clients, and must work hard in order to achieve success for them.

Diversifying a portfolio is an effective long-term investing strategy. This could include adding domestic stocks, international stocks, and bonds to a portfolio. Buying a stock is basically buying a share of a company at a low price, and expecting its value to rise over time. Even though they are usually more volatile than other options, they tend to pay out a greater return. It is wise to purchase both international and domestic stocks, because it allows you as an investor to rely on something outside the U.S. economy, in case the economy was to plummet. With a bond, an investor lends a company, the government, or organization money, and expects to receive interest repaid to them. They are generally safe investments, although some are riskier than others. A great ratio of stocks to bonds in an investment portfolio is 60 percent domestic stocks, 25 percent international stocks, and 15 percent in bonds. This is an aggressive approach, but can yield great dividends for an investor willing to stick with it through thick and thin. The average return historically on this investment strategy is a whopping 9.62 percent, but these investors saw their return after being patient and waiting on the stock’s value to increase. This patient “waiting” is another great long-term investing strategy.

One investment that could yield big dividends in the future is purchasing stock in the renewable energy company Iberdrola S.A. The company based in Spain has the “largest renewable asset base of any company in the world” according to Energy Digital. Renewable energy is imperative, as it reduces carbon and other heat-trapping emissions, which in turn reduces global warming (the gradual increase of the Earth’s temperature due to these heat-trapping emissions). It has many poor effects on the Earth’s climate, ecosystems, and human health. In a study conducted by the U.S. Department of Energy's National Renewable Energy Laboratory, it was found that if 80 percent of the energy produced in the U.S. was renewable, the heat-trapping emissions could be reduced by about 81 percent. This would help to solve this issue of Global Warming, making renewable clean energy appealing.  A study reported on by the BBC found that coal, oil, and natural gas will be gone by somewhere around the year 2050, based on consumption levels of these fossil fuels in 2012. This leaves the world with an energy crisis, but also a solution: renewable energy.

Because Iberdrola is the company with the most renewable energy assets available worldwide, it looks like a great option to solve this energy crisis. It is also diverse globally, which would allow its influence to spread to many different countries in the world (it is currently located in Spain, Portugal, Latin America, the U.S. and the U.K.). The company’s stock has been at a steady upward trend since the middle of 2012, and is currently trading at around 6.60 Euros (approximately $7.18 US) per share. Although the EPS has been negative over last 10 years, investing in this stock is not to see short-term returns. Renewable energy is not preferred right now, but will probably become the standard 30 or 40 years down the road. Iberdrola has a great amount of risk; however, it could pay great gains to an investor who is willing to hold it for a very long time.

Another company that could pay out great gains to an investor in the long run is Tesla. As oil continues to become scarcer and pollute the air, there must be a transition in the form of transportation, as cars will probably not run on gas in the near future. One solution is the electric car. Tesla had the 3rd most electric car models sold worldwide in 2014 with its Model S, and the most estimated sales from January through April of 2015 with that same car. Tesla is renowned for its highly innovative and technologically advanced electric cars and could see a huge increase in sales as gas-powered cars start to taper off. Even with gas prices being low in 2014, the amount of electric cars bought rose 23 percent, as a record high 119,710 cars were sold. This shows an increasing market for Tesla and its cars. Tesla is special, as its cars go against the stereotype that electric cars do not have power and are visually unappealing. The new Model S has a very sporty design and is fast and powerful. This could help car buyers making the switch from gas to electric have a little bit easier time ridding themselves of their gas powered cars. Its current PEG ratio is a reasonable 1.5 so investing now could be a smart decision.

With investors looking to buy stocks such as Tesla or Iberdrola, capital markets analysts have their work cut out for them. They are trying to make a deal between a company and an individual both trying to make money. The analyst must to do heavy research on the company to see that both sides receive a good deal on the investment. They must remember that the potential financial future of the client rests on their shoulders, so they should make good, educated decisions based on this.



 
 
 
     ©2004 - 2017 SIFMA Foundation for Investor Education    |    www.investwrite.info Need Help?    |    Official Rules      
Developed by Kitch Walker & Company LLC for the SIFMA Foundation for Investor Education.
Kitch Walker & Company LLC