Date of Award

Winter 12-2002

Document Type

Thesis

Degree Name

Honors College Theses

Department

Accountancy

First Advisor

Dr. Herbert Vessy

Second Advisor

Joyce W. O'Rourke

Abstract

It often takes very little to make the difference between financial failure and success, but in times of extreme market volatility, even the relatively sophisticated investor can sometimes be caught off guard. People cannot afford to ignore their investments. Without a coordinated strategy, it can be difficult to build an effective investment portfolio that meets individual financial needs. As an individual investor, it is important to evaluate each investment in the context of the overall objectives. A fundamental key to being successful when building a stick investment portfolio is understanding the history of the stock market. This makes investors aware of the historical fluctuations in the market, which will allow them to make better decisions about investment options. Thus, this thesis provides a history of the stock market and compares some of the most successful investments strategies (by investment styles) to date. Evaluating different strategies allows investors to tailor an investment plan to their specific needs. However, some investors think it is unnecessary to choose an investment strategy and would rather randomly select stocks for their portfolio (e.g., by personal preference). This paper will analyze random stock selection an option for selecting an investment portfolio. Using a statistical approach, we find that it is better to use an investment strategy to select stocks rather than employing a random selection method.

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Accounting Commons

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