1. Investor Profile Mr. Avocado Willey is a 65 year old architect who sustained an injury at work. Since this occurred entirely due to negligence of safety procedures at work, he was able to successfully sue the company for compensation. He has been awarded an initial compensation of $8m, which is subject to a rise as the case is still ongoing. The seriousness of the injury meant that he is no longer able to continue working. He has already invested $3m in 5 Yr 0.85% US treasury bills for a fixed income of $25,000 in order to cover his living expenditures. Additionally, he has decided to invest remaining portion of the compensation in stocks ($5 million) to increase his wealth, as well as to benefit from regular dividend payments that will enable him to pursue his leisure interests. Mr. Jones has identified the technology sector as a potential investment opportunity since it offers an interesting mix of high growth firms and well established, stable companies. He appreciates the risks associated with investing in the technology sector, but having heard a lot about technology bubble in 1990’s, he wants a careful selection of stocks of growing but relatively well-established and stable companies. Hence, he is willing to take medium risk, and wants a combination of stocks which provide a good capital return and possibly a timely dividend as well. He is looking at the time horizon of 3 years for this investment, and considering the volatile nature of technology sector, he is willing to invest for further 2 years after reviewing his investment returns 3 years from now. Considering the circumstances due to which he sustained his injury, Mr Jones is also concerned about the ethical position of the companies. He wants to invest in companies which demonstrate good ethical values and show ethical responsibility to the stakeholders. This, however, does not mean that ethics override his requirement for returns. Also, Mr Warren suggested that corporate governance should be looked upon carefully in the firms that he invests in. Keeping in view the unpredictable climate of the technology sector, Mr Jones has requested the services of MoneyMaxx Investment Consultancy to get recommendation for investing in stocks tailored specifically to his preferences. 2. Introduction This report is produced by MoneyMaxx Investment Consultancy for our client Mr Warren Jones. The purpose of this report is to recommend to our client an investment in a mix of technology stocks. In order to achieve this purpose, this report starts by setting a scene
of current economic climate in general and the state of technology sector in particular. Following this overview, an analysis of selected technology stocks is presented. The order of stock analysis in this report is such that the two companies in which MoneyMaxx recommends investing are analysed first, after which those technology stocks are discussed which either do not fall in line with client’s investment profile or are deemed as not worth investing in by MoneyMaxx. The report concludes with final remarks on exactly how much to invest and how much expected return our investor will receive following our recommended investment. As per investment analysis preferences of MoneyMaxx, more focus is put on future potential than past performance of the stocks in which an investment is recommended. Overview of the Technology Sector The macro-economic climate after the 2008 recession has not been giving any good news 3.
to investors and stock marlets, not only for the technology industry but for the economies in general. Everyday, the world media is full of news regarding the looming eurozone crisis, which will undoubtedly affect world stock markets including the US stock market due to the inter-dependency of financial markets around globe. This uncertain environment on one hand induces risky investors to take advantage of the situation for higher returns, while on the other hand risk averse investors...
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