By Elias Kott, Staff Writer
As of Sept. 23, 2020, all three major indices finished down for the day with the Dow Jones down 525.05 points (-1.92%), S&P 500 down 78.65 points (-2.37%) and Nasdaq taking the biggest hit down 330.65 points (-3.02%).
Currently, the Dow sits at 26,763.13, S&P 500 at 3,236.92 and Nasdaq at 10,632.98. SIMM’s current portfolio value sits at $457,739.81, respectively.
Precious metals such as gold and silver were also both down for the day with gold’s price per ounce currently sitting at $1,865.10 and silver’s price per ounce at $22.84. Although price levels have consistently dropped throughout the last few weeks, it’s important to remember that this largely has in part to do with a correction in overvalued stocks especially in the technology sector. Currently, the economy is in the midst of a recession (which means the GDP has declined for two consecutive quarters). As a result, macroeconomic variables, such as unemployment rates, are still at very high levels, so seeing stock market prices face a correction is very justifiable. In addition, historically during the months leading to a presidential election, the stock market is typically very volatile with rapid price fluctuations, so what we are currently seeing is not extremely hard to fathom.
This week in SIMM, some notable events that occurred included two smaller pitches that were done by the consumer discretionary and financial sectors. The stock that was pitched for Consumer Discretionary was Penn National Gaming ($PENN) which notably launched Barstool Sportsbook. Also, the financial sector presented a mini pitch on Square Inc ($SQ) which notably owns CashApp. Although both of these pitches were treated as if the class was going to vote on whether to buy these equities, the intention of these mini pitches was to serve as practice pitches for when it comes time to present a real pitch. A good way to think of mini pitches is that they are like preseason games that serve as a tune up before things really count.
In addition, Drake Dettore, a junior finance major, led the class through a presentation discussing the importance of understanding risk associated with expected returns. The presentation primarily touched on the importance of understanding the term beta. Beta denotes the amount of volatility associated with a stock in relation to the overall stock market. A common benchmark used to compare the equity is the S&P 500 which has a beta of one. If a stock has a beta greater than one, that stock’s price moves more than the overall market resulting in higher risk; however, with this higher risk comes a higher potential return from this stock. On the other hand, a stock whose beta is less than one means that the stock’s price moves less than the overall market, which is a sign of less risk, however less of a return. Understanding beta can ultimately help one in setting up a stock market portfolio that tailors one’s specific financial goals.
To learn more or to stay up to date with other SIMM related news go check out our website at https://www.sbusimm.org/ or follow us on twitter at BonaSIMM.
kottej18@bonaventure.edu
