1) Portfolio overview Finally, we have already finished with our stocks analysis and now its time to perform our portfolio. The first is to say that we initially analyzed stocks with the expectation of buying and building a portfolio. Basically, the paper chosen for the medium and long term, and it is to buy and hold. We did not consider the inclusion of short positions, since our portfolio of exclusive investment, not speculative. Moreover the maximum profit from short sales are always limited to 100%, while the growth potential is endless. It is also worth noting that we analyze only the action, but in the investment portfolio of the personal best to include at least 30% of the bonds (depending on the loyalty of the risk).Our investment horizon is 3-5 years. The basic strategy - buy high quality but undervalued stocks in the market. Furthermore, most papers were added to the portfolio during the drawdown, which creates an additional margin of safety. Listed below are the stocks included in the portfolio with a brief description of the purchase motivation and stop losses levels where it is possible. Stop Loss enable you to see that hypothesis was wrong, and to close the deal with the smallest possible loss.1. Nestle: The company is very stable. At the same time, their business is under expansion. They want to take a significant share of the healthcare and nutrition market because margin .This share trades in a narrow rage, but in long term they are in a strong growing trend. Stop loss near $69; 8% loss limit.The expected growth:6% anually. (growth company, no price level goal) 2. Contineltal AG :They rise sales forecast three times this year despite of slowdown car market. Commodity prices affect the company in a positive way, and it's probably for a long time. Plus they made couple interesting acquisitions which will strengthen their business. Stop loss near $190; 13% loss limit. The expected growth: 10% anually. (growth company, no price level goal) 3. Borg Warner: When compared with major competitors, Borg Warner looks quite attractive. They have very large customers and they are expanding their product line. Price failure of Borg Warner has speculative nature. Stop loss near $39; 7% loss limit. The expected growth: 35%.4. Michael Kors Inc: Wall street estimates Michael Kors Inc, as well as 4 years ago, ignoring the tremendous growth in key financial indicators. Michael Kors Holdings looks like a model example of an investment, just like Graham taught. The only caveat is the lack of dividends that would have once again demonstrated the company's ability to earn money, and would not have made the paper more attractive to institutional investors.Stop loss near $37.5; 4% loss limit. The expected growth: 40-80%. 5. Mondelez: current P / E index is equal 8.32, but it is not "real", as it is related to the recent sale of the coffee business that gave 5$ billion cash. the company is big enough, and has sufficient experience and a margin of safety to overkome unexpected problems. Stop loss near $39; 12% loss limit. The expected growth: 7% anually. (growth company, no price level goal) 6. LVMH: is one of the most defensive assets in global consume at one of the most attractive multiples. On our 2016 estimates, LVMH trades on 20.5x P/E. This could be 40% profit. Because of the events in Paris and the slowdown in China stocks are under pressure. Now there is the opportunity to buy these shares at a good price. Stop loss near $145; 12% loss limit. The expected growth:8% anually. (growth company, no price level goal) 7. Polaris Industries: Buying a growing company with no financial difficulties at a discount of 40% is definitely a good deal. Polaris Industries Inc. will merge Timbersled Products, which will strengthen and expand their business. Stop loss near $105; 6% loss limit. The expected growth: 60%. 8. The Walt Disney Company: Analysts are looking for a 10% rise in earnings for fiscal 2016 and 2017. Estimates for both years were recently revised higher. Disney's success will be largely due to the success of Star Wars and Marvel franchises. Stop loss near $110; 7% loss limit. The expected growth: 10% anually. (growth company, no price level goal)9. Activision Blizzard: The company transformed into a full-fledged entertainment holding company like Disney. Its success will depend on the outcome of Warcraft movie. A decision on the sale will be made based on the movie box office. 10. The Macerich Company: The company is actively expanding and they have good finace financial performance. The company considered the price of $ 99.5 and has refused offers to buy, so the management will try very hard to price rose. Stop loss near $77; 4% loss limit. The expected growth: 28%. 11. Western Digital Corporation: WDC announced that it would be acquiring SanDisk Corporation for a combination of cash and stock. The upward trend of SSD is obvious and WD purchase secured a good share of the market , Western Digital will be able to show very good growth in revenues for sure. Stop loss near $59; 5% loss limit.The expected growth: 76%. 12. Union Pacific Company: Union Pacific Railroad is another example of a company that would Graham buy. Low P/E index, high and stable dividends, the permissible level of debt, the increasing profitability and growth from year to year.Stop loss near $79; 6% loss limit.The expected growth: 43%. 13. GAP: Currently GAP alas not a favorite among investors. The paper is now more than ever tied to the statistics, which gives a chance to those who are able to respond quickly to changing factors. Stop loss near $23; 8% loss limit. The expected growth: 35%. 14. Gilead Sciences: I'm sure Gilead is one of the best opportunities in the market at the moment. Even if someone is not convinced the financial performance and prospects, the current policy of repurchasing shares - it's almost guaranteed 10% profit. Stop loss near $99; 6% loss limit. The expected growth: 15%. (more than 50% after penetration level $120) 15. Advanced Semiconductor Engineering: As a full-service provider, ASE currently faces competition only in individual segments of the semiconductor manufacturing process, but does not have a direct competitor able to provide the full service solution. The company has a strong financial position at the moment and really big dividends. There is a great potential in areas such as the Internet of things and this area is where the potential can be huge money. Stop loss near $4.4; 20% loss limit.The expected growth: 50%.2) Portfolio stats and ratiosAs a result, in my opinion, we get a good portfolio performance. For example the P / E is 12, while the current S&P 500 ration equials 22. Return on assets is 90% higher than S&P average, while return on equity is 50% higher. EV/EBITDA is 9.4 which is also good in comparison with S&P's median which is 11.4. Projected EPS growth (5 yr %) equials 14.50 what is 47% better than the market. Finally, beta equals to the market average of what it means for us that our portfolio has the same risk as the market, but at the same time undervalued, and thus shows the best indicators of earnings growth. Moreover, our portfolio will bring a 2.6% dividend, which completely covers inflation. (2014 USA inflation was 0.76%; 2015 forecast 1.29%).3) DeversificationAs for diversification, capitalization of 40% of our securities owned medium-sized companies, 60% of the large. Among middle capitalization companies half of the market relates to the value companies and the other half to the core companies. Among the securities of large companies a big part is of the core, and a little less than half are companies of growth. Above also shown the diversification by geography. 73% of companies are North American, 20% are European and 6% are Asian. With regard to sectors of activity, 20% of companies can be attributed to defensive stocks, 26% for sensitive and 53% for cyclical. Considering all these, we believe that the portfolio went fairly balanced. Certainly an increase in the share of emerging markets stocks would improve the situation, but current market conditions disposes to more stable assets. Emerging markets now in too strong an indefinite. 4) CorrelationsAs you can see in the picture, we considered correlation matrix to evaluate the relationship and the direction of changes in the yield of assets. As a result, the average correlation value is equal to 0.28. This is a fairly low correlation, which means that companies in our portfolio are quite diverse. We also considered the average correlation of our portfolio with the market, it has turned out is 0.47. It is also a good indicator, taking into account the fact that the majority of our stocks are american. Besides, today in the age of globalization, all the markets are correlated quite high.5) Risks • Through analysis of probabilities, we have learned that with 95% probability our portfolio return will be between -12% and 42%. With 71% probability return will be between -0,1% and 28,4%. Also, portfolio expected retun is 15% and volatility is just 13.4. Thus, the potential profit is greater than the potential losses.The Sharpe Ratio is a measure for calculating risk-adjusted return. • The Sharpe ratio is theaverage returnearned inexcessof therisk-free rateper unit ofvolatilityor total risk. One intuition of this calculation is that aportfolioengaging in “zero risk” investment, such as the purchase of U.S.Treasury bills(for which the expected return is the risk-free rate), has a Sharpe ratio of exactly zero. Generally, the greater the value of the Sharpe ratio, the more attractive the risk-adjusted return. We have Sharpe 1.69 whish is better than s&p 500 sharpe ratio 1.03.• Sortino ratio is a modification of theSharpe ratiothat differentiates harmfulvolatilityfrom general volatility by taking into account thestandard deviationof negative asset returns, calleddownside deviation. The Sortino ratio subtracts therisk-free rate of returnfrom the portfolio’s return, and then divides that by the downside deviation. A large Sortino ratio indicates there is a low probability of a large loss. 3 year S&P ratio is 1.76. Our is 3.6. 6) OptimizationWe tried to optimize your portfolio based on Efficiency Ratio (ie, highest expected portfolio return at a given level of volatility). Theoretically, our expected return increased by 7% and slightly decreased volatility. Schedule potential returns and the proportion of the securities offered are also visible in the image.But at the same time we have made backtest for 2 years period with the same approach. As a result only in the last quarter of our portfolio had worse results against optimized. To conclude, the benefits of optimization on the basis of efficiency (lower volatility, mathematical increase profit potential) is highly questionable. Leave an equal share (by 6.66% each) of companies in the portfolio in our opinion reasonable.7) ConclusionTo conclude it all, our risks are limited to 8-9% of the portfolio, due to the stop loss on the basis of technical indicators. By the way, the simulations showed that in 2012, the maximum drawdown of the portfolio was in September 2015 and it amounted to 12%. Thus, given that our portfolio is not high-risk securities, believe the moment favorable for the entry, as the drawdown has already passed its peak. The expected return greatly exceeds the maximum loss and is about 15% due to growth, and about 2.5% dividend yield. We believe that the expected return outweigh the risks.