As seen in Figure 1.1 when SPY and TMK is compared you could see the trend it is following. Over the past three months the red line referring to TMK is pretty much following the trend of SPY blue line. .
Another stock I chose for the long equity is KO. The Coco Cola brand has always been purchased throughout history and seemed to be a great company to have lasted over the past decade. The other decisions that helped me buy this stock was the price is fairly cheap and have positive earnings and growth. The risk associated with this investment is that it won't pan out and the company goes under and I lose my investment. The return is that if I outlast the behavior of wanting to touch or make changes to the investment that will produce great return on my money. The economic events that could impact this investment is none because people will always purchase soda. I also learned the same thing when purchasing Torch Mark that to see a big return I must wait for the long term to make and impact. As seen in figure 2.2 KO the red line actually out performs the SPY the blue line a couple of times throughout the three month period.
Short Equity .
The second of required trades was a short equity. The purpose of the trade is to pick a stock that has the potential to decrease in value rather than increase in value. The choice I made was Best Buy and RadioShack. The reason for Best Buy it is becoming a bad business. Over the years the company has negative growth. The reason is because of technology people are buying these services through a lot of online services making it cheaper for the consumer. The risk associated with this is the company start to have a positive growth and the return is the company will continue to have negative growth and I will earn money from it. The same technique was used for RadioShack but not knowing the Stock Trak software I purchased it rather than shorting it because it was too low of cost to short the stock.