We had some investment on 2nd and 3rd year at Uni. Looks like quite good money can be earned on mergers and acquisitions. For example, if a company merges or aquires another company, the aquired company’s share price will rise but the buying company will probably fall. Recent example: Lenovo just bought Medion. Medion shares go up 17%, Lenovo shares go down 3%. Similar to Cadbury and Kraft.
It’s just the timing and following informations really. A good buy and hold strategy with investing in FTSE100 (simulation with real stock market prices) was as good as shuffling shares all the time and buying and selling as the fees were lowering our profit.
A simple and easy way that our lecturer believes in is to buy shares with low P/E ratio (around 10 or under) as they might be undervalued but within FTSE100 to keep the risk down. A fairly low risk investments got us a result of around 7-8% gain in a month, which was about the same/a bit higher than FTSE100 return in the same time.
I know it was virtual money but we still did the research and had to be up to date and it takes time. For example one pharmaceutical company, we bought it cheap as it had a case against it for loads of £££, it made a provision so lowered it’s profit. Case was won by the company, provision went back to profit and hey presto share price went up, we made a profit.
[edit] also another thing we learned is to diversify your portfolio to lower risk
If I was investing my own money as I’m risk averse I would buy something well established, FTSE100, check charts for recent performance etc it will still give a better return with a dividend and profit from sale than a normal bank account that gives something around 2-3%
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