How does one construct an investment portfolio? There is virtually a limitless number of investment portfolios that can be constructed even within the Sharetrack 100, never mind the real world where one can choose from more than 20,000 companies worldwide. However, there are pointers that might help.

If one looks at what the institutional investors do when investing monies on behalf of their clients, one message is clear. You need to have a broad spread of investments to have some measure of control over the risk or volatility, which is part and parcel of buying stocks and shares.

In the first instance, the investment in equities will typically be between 65 per cent and 75 per cent, with the balance invested in Government securities, property and cash. Secondly, the investment in shares is very widely spread internationally and also between different industries and stocks. With professional investors, any one stock is unlikely to represent more than 3 per cent of the total investment portfolio.

The benefits of this strategy are clear enough - good double-digit annual returns were achieved over the past decade. Yet, when markets have taken a severe battering the fall in values has been modest (by 3.2 per cent in the fourth quarter last year and 5.1 per cent in the first quarter this year).

Of course, Sharetrack 100 is a bit different. Given the short-term horizon over which one is investing in this competition and that an average performance will not win any prizes, the normal prudent rules of investing do not necessarily apply.

And since, of course, one is not investing real money, the risk profiles that may ultimately win out in Sharetrack 100 will not necessarily replicate what one would do with hard cash. In other words, for the purpose of the competition, one should probably take a more aggressive approach than that rightly adopted by the professionals in real life.

So what are the main considerations? 1) Will stock markets generally rise or fall between now and July 6th? This may seem a trite question but it is an intriguing one at the moment. Rapidly falling US interest rates and somewhat better news on the economic front have increased optimism that the slowdown in the US may not be as severe as feared and a turnaround may happen in the second half of the year. If so, will the US markets power ahead (and the rest of the world with it) in anticipation of such an eventuality?

At the same time, May to September is normally a very quiet time for markets and more bad news on corporate earnings is still likely. Taking a more aggressive strategy could mean having a bigger weighting in telecoms, media and technology (TMT) stocks if one expects markets to perform strongly. If, however, one expects further market shocks, a more aggressive strategy could mean to load up with defensive stocks.

2) Which sectors do you prefer? This is a similar consideration to the one above. If you are very positive on the short-term outlook, then high-risk categories such as technology or stocks which have fallen particularly sharply in the past year may be the preferred choice. The converse also applies.

3) Are there stocks within the portfolio where you believe there is going to be a particular event, which will lead to the share price rising - e.g. good results or a takeover?

Remember, you do have some flexibility in altering your position through trading your portfolio. In the environment prevailing over the past year, analysts have not exactly been receiving good press. How will you do? Best of luck and enjoy the competition.

Liam Igoe is senior equity analyst at Goodbody Stockbrokers