To begin with, I invested into XLK because it is a company that invests into tech companies in the S&P 500 Index, which means that majority of the companies that it invests in are blue chip stocks that are reliable like Microsoft, Intel, Visa, and Adobe, however it also contains a mixture of more volatile stocks. Additionally, according to Investopedia, XLK has outperformed the S&P 500 substantially over the past year with returns at 25.5% compared to the overall S&P's 14.6% returns, which I found promising. However, I didn't want to simply focus on XLK's past achievements but understand where the company was headed for in the future. So, I went to the website StockInvest, a trustworthy database that forecasts the successfulness of companies based on previous trends, and found positive results. According to the StockInvest, XLK has an upward trend and is not only a good stock for long term gains, but is great as a short term investment as well, which you can see in the graph below.
I was also prompted to buy XLK because according to ETF, it's MSCI ESG Fund Rating is an A, which signifies that it's resilient to long term risks and opportunities that arise from environmental, social, and governance factors, thus making it a reliable investment. Finally, I decided to invest in XLK because it is an undervalued company. According to Simply Wall Street, an estimate of the fair value of XLK is $138.58 compared to its current price of only $86.45. Therefore, I invested into XLK not only because of its past outstanding performance but also because of the positive predictions for the company in the future.
The next company that I invested in was InMode, the leading global provider of innovative and award winning medical technologies, focusing on developing, manufacturing, and marketing novel radio-frequency technologies for plastic and minimally invasive surgeries (InMode). I selected this company because Investor's Business Daily, an American newspaper and website that covers the stock market, international businesses, finance and economics, ranked InMode as one of the top stocks to buy and watch in November. This is because, as the newspaper explains, in the latest reported quarter, earnings rose to 77% from the same quarter last year. Moreover, sales growth accelerated for the third straight quarter, shooting up 57% to $40 million. Additionally, another reason for why I invested into this stock was because Zack's Ratings, a reliable short term stock recommendation website that uses analyst earning estimates to rank stocks, classified InMode as a "strong buy", explaining that it is predicted that InMode will have an above average return relative to the market in the next few months. Supporting this claim that InMode will have higher returns than the market, Simply Wall Street, a trustworthy company that sorts complicated stock information into useful infographics, explains that analysts predict that InMode's revenue at 17.9% per year is forecasted to grow faster than the U.S market's revenue of 7.3% per year. Additionally, you can tell in the below graph that InMode is predicted to have a steady, high growth rate over the course of the next few years.
One last reason for why I invested into this stock is that it is volatile so although this means that there is high risk involved, it also means that there are high rewards at stake. Since, my portfolio consists of mainly trustworthy, giant companies, I realized that it made sense for me to invest in a volatile stock considering the shortness of this simulation's length. What I didn't realize though was how volatile the stock was as the next day after I bought it, the price of the stock increased by 12% (for no notable reason that I could find)! I knew that this signified that the stock would crash in the following days, so I sold the stock directly after and sure enough, it crashed by 3% the next day. However, I will continue to monitor this stock and see if there's a dip in the market anytime soon that will allow me to repurchase it.
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