Brief about Investment Management

Finance Brief about Investment Management Introduction Every individual saves some part of his or her income for any unforeseen situation. In addition to this, saving is also important for every person as adequate amount of money in the account after retirement will ensure a better and tension free life. But putting money just in locker is considered as dead investment as the saved amount will not grew. Further, it is also a well known fact that human being is a greedy animal (Pihlman, et. al., 2011). He wants to see his money growing in leaps and bounds and for this purpose only, instead of putting money just in the lockers, now day people are more interested in investing their capital in certain areas which gives good returns (Pihlman, et. al., 2011). In order to make quick bucks, people are investing their savings in different schemes which delivers good returns. In this regards, stock market has come up as one of the most popular areas in which people are readily investing their money on different-different stocks for getting higher returns. Putting money in savings accounts does not reap higher returns, so now day people are more interested in share market as it has generated better returns in recent past (Focardi and Fabozzi, 2004). But before investing money in the stocks of different companies, it is essential for every investor to have adequate knowledge regarding the investment management. Investment management can be defined as purchase and sale of investments within a portfolio. The area of investment management is quite wide which includes banking, budgeting activities and taxes; but in general perspective investment management refers to trading of securities and portfolio management to attain some desired goals (Pihlman, et. al., 2011). Major activities involved in investment management are: Analyzing financial statements of the companies Selection of stocks Selection of assets Implementing desired plan, and Continuous monitoring of investment activities (Fabozzi, 2008). Investment Objectives and Philosophy Objectives Below mentioned are main objectives of all the investors depending on their risk taking capabilities and stage of life: Income: The main motive behind making investment of all the investors is generating income. They consider share market as alternative source of income and invest in securities which deliver higher returns (Focardi and Fabozzi, 2004). Growth and income: Another investment object of an investor is both; capital gain and income. Most of the people dont only want extra income; rather they also want appreciation of their capital. Capital appreciation is associated with the risk taking capability of an investor. Safety: Investments are never considered to be safe as some kinds of risks are always associated with them. Still there are some investment products such as government bonds, fixed deposits which deliver low but continuous returns. People who invest in such instrument have main objective of security of their invested capital (Fabozzi, 2008). Growth: Unlike growth and income, an objective of some of the investors is only growth, that is, they do not want any income from their investment, rather just want to see their capital growing. Such investors invest in commodities, property market, gold, mutual funds, etc. Active trading / speculation: Another objective of investors is active trading or speculation of the market activities (Focardi and Fabozzi, 2004). Apart from above stated objectives, some of the other objectives of investment are tax exemption and liquidity. Philosophy Different people have different motive behind making investment in any form of instrument. Thus, investment philosophy defines certain principles on the basis of which an individual makes decision of investment (Swensen, 2009). These philosophies may vary from people to people such as: Fundamental Investing: With this philosophy, an individual or group evaluate the earnings prospects of the firm and on the basis of that makes their investment decision. Value Investing: In such kind of philosophy, investor analyzes all the stocks and identifies the companies whose stocks are undervalued. Further, such individuals believe that there are higher chances of these stocks to deliver better returns (Brentani, 2003). Growth Investing: Investors with such philosophy believe that it is beneficial to invest in those stocks which are form the emerging sectors. Products and services which are from emerging sectors have higher growth prospects and are expected to deliver returns at higher rates (Smithson, 2003). Technical Investing: These are the individuals who invest on the basis of past performance of the stock and neglect its current standing. Such investors evaluate the past data of the companies and on the basis if analysis of the data makes sell or buy decision (Kendall and Rollins, 2003). Socially Responsible Investing: Investors with such kind of philosophy looks for those stocks which actively participate in corporate social activities. They feel those companies which follows ethical business standards and stick to moral standards will produce better results in comparison to other companies (Focardi and Fabozzi, 2004). Contrarian Investing: Investors with this kind of philosophy are handful in the market. They perform just opposite kind of activity in relation to the rest of the market. There trading decisions are contradict to the majority of the market. For example, if the other investors will go for buying of certain stocks, they will go for its selling and vice versa (Pihlman, et. al., 2011). Portfolio Strategy and Asset Allocation Portfolio Strategy Investors invest in more than one stock on the basis of performance of particular stocks. Thus, combination of all the stocks is known as portfolio of stock. Portfolio strategies are not but general guidelines that help investors in strategically investing in stocks of different companies so as to meet their financial goals. It deals with designing of optimal portfolio and asset pricing. In this regards, risk return trade off is the best tool which is widely used by the investors in selection of optimal portfolio (Kendall and Rollins, 2003). Further, the Capital Asset Pricing Model (CAPM) shows that measure of sensitivity () is in proportion to the assets risk premium. Asset Allocation While putting money in any investment instrument, it is essential to properly allocate the funds in different assets. Thus asset allocation can be termed as investment strategy that helps in adequately investing money into different stocks or instruments so that the portfolio can achieve a balance between risk and reward. In other words it can be said that this strategy deals in adjusting the percentage of different assets in the portfolio as per the investment time frame, goals and risk tolerance capacity of an investor (Kendall and Rollins, 2003). Basically this strategy is adopted by the investor for diversifying its investment portfolio so that overall risk from the investment can be reduced. Return of an investment is majorly dependent on the allocation of the assets in the portfolio. Characteristics of different assets are different from each other and they perform differently in different economic scenario and market conditions. Further, different investment instruments delive r different returns and these different returns are not perfectly correlated (Kendall and Rollins, 2003). Thus, an optimal portfolio is one which is quite diversified, that is which consists of different-different investment instrument with varied characteristics so that overall risk from the investment can be reduced and still the investment reaps higher returns. Here are some of the strategies that can be used for achieving optimum assets allocation: Strategic Asset Allocation: this is the most common method of asset allocation and focuses on the concept of basic policy mix. That it, it includes stocks form each asset class based on their expected rate of returns. For example, the portfolio may consist of fifty per cent bonds with annual return of five per cent and fifty per cent stock with annual return of ten per cent so as to achieve a return of about seven and half per cent (Focardi and Fabozzi, 2004). Constant Weighting Asset Allocation: The above focus on buy and hold concept. Thus, even if the scenario changes, the portfolio remains the same. To overcome from this, one may adopt a constant weighting asset allocation approach. In this approach, the investor keeps on rebalancing the portfolio as per the changes in the economic and market conditions. For example, if some stock is not performing well and its prices are going down, investor can invest on it and other the other hand, if price of any particular stock is going up, the investor can sell that stock (Focardi and Fabozzi, 2004). As such there is not thumb rule for time of rebalancing the portfolio in strategic and constant weighting assets allocation, but generally it is advice to rebalance the portfolio when the actual value of the portfolio changes five per cent from its original value. Tactical Asset Allocation: If an investor invests for longer time duration, in such cases the above stated allocation strategies proves to be rigid (Pihlman, et. al., 2011). Therefore, sometimes it is beneficial to invest in some securities for shorter time period to practice tactical deviation and to benefit from exceptional investment opportunities. Further, this strategy brings flexibility. This is regarded as moderately active strategy but in this the investor must have knowledge of short term investment opportunity, so that later on he can again rebalance the portfolio (Pihlman, et. al., 2011). Dynamic Asset Allocation: Next strategy adopted by some of the investors is dynamic asset allocation strategy. It is also an active asset allocation strategy in which investor keeps on adjusting the proportion of different investment instruments with the rise and fall of market. Further changes in the economic conditions also force an investor to change this asset mix (Pihlman, et. al., 2011). Dynamic asset allocation strategy is just opposite of constant weighing strategy as in this strategy investors buys or hold those assets which are rising and sell those assets which are declining. For example, due to certain reasons if stock market starts declining, an investor starts selling his assets assuming that the market will fall further and similarly if stock market starts performing well, investor buys stocks with a hope that the market will continue to perform well (Focardi and Fabozzi, 2004). Insured Asset Allocation: Another asset allocation strategy which is practiced by many investors is insured asset allocation strategy. Under this strategy an investor set the base value of the stock and tries that the portfolio value does not go below the base level. As long as the value of portfolio is above the base value or is increasing, investor practices active management and tries to keep on increasing the value of the portfolio (Focardi and Fabozzi, 2004). On the other hand, if the value of the portfolio, due to some reason starts declining, investor starts investing in risk free assets such as government bonds, fixed deposit, etc. so as to limit the base level. This type of strategy is practiced by investors who want secured returns and are involved in limited active portfolio management (Pihlman, et. al., 2011). Integrated Asset Allocation: Last in this series is the integrated asset allocation strategy. Under this strategy, while deciding the elements of the portfolio, investor considers both the parameter; his economic expectation and his risk taking capabilities (Kendall and Rollins, 2003). All the above stated asset allocation strategy only considers future economic expectations of an investor and does not focus on his risk taking capacity or his investment risk tolerance. But in case of integrated asset allocation strategy, it considers various aspects of all the above stated strategies. In addition to economic expectation, it also accounts for rise and fall in stock market and risk tolerance capabilities (Focardi and Fabozzi, 2004). Among all the strategies, integrated asset allocation strategy is the broadest asset allocation strategy, but it allows investor to practice only one asset allocation strategy at a time, either dynamic asset allocation strategy or constant weighting asset a llocation strategy (Kendall and Rollins, 2003). References Fabozzi, J. F. 2008. Handbook of Finance, Financial Markets and Instruments. John Wiley Sons. Focardi, M. S. and Fabozzi, J. F. 2004. The Mathematics of Financial Modeling and Investment Management. John Wiley Sons. Pihlman, J. et. al. 2011. Investment Objectives of Sovereign Wealth Funds - a Shifting Paradigm. International Monetary Fund. Swensen, F. D. 2009. Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment. Simon and Schuster. Brentani, C. 2003. Portfolio Management in Practice. Butterworth-Heinemann. Smithson, C. 2003. Credit Portfolio Management. John Wiley Sons. Kendall, I. G. and Rollins, C. S. 2003. Advanced Project Portfolio Management and the PMO. J. Ross Publishing.

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What are the essential differences between Prometheus(as he is portrayed by Hesiod) and Loki as he appears in Scandinavian myth - Essay Example On the other hand, Loki was malevolent since his intentions were purely to cause suffering to others (Schnurbein, 112). Prometheus was a god of fire, who stole fire and gave it to mankind, an aspect that then brought civilization that was against the will of his family gods, because the god Zeus wanted to obliterate the human race but his plans were destroyed by Prometheus. Therefore, Prometheus was subjected to eternal punishment where the eagle would feed on his liver daily, â€Å"not only for stealing fire, but also for destroying Zeuss plan (Peretti, 194). Loki however applied his intellect in a totally different way. His mischievous intellect even enabled him to sneak his way up to becoming a god when he was not even deserving, and through his malice, he became â€Å"responsible, though indirectly, for the death of deaths of other gods† (Schnurbein, 117). There is little evidence to suggest even that Loki ever stole fire, but there is much evidence to the effect that his malicious ways brought a stir amongst the gods, and he was finally sentenced to punishment which he really deserved. The other essential difference between Prometheus and Loki is in relation to overall effects of their actions. Prometheus overall consequences were beneficial, but Loki’s overall consequences were destructive (Lamberton, 41). This is because; Loki was a selfish and egocentric god, who did not stop at anything to ensure that he succeed in his mischievous ways. Loki sided with his family against the other gods, and he set himself on a path of causing destruction to the other gods, even though little evidence exists to suggest that he deserved to be a god. He pursued his mischievous plans to the end, and saw the destruction that he intended to happen accomplished. Thus, even after being sentenced to imprisonment, his mischief did not end there. He was supported by his wife

Eric Rauchways Murdering McKinley Essay Example | Topics and Well Written Essays - 1250 words

Eric Rauchways Murdering McKinley - Essay Example Such a system thereby magnified some of the social challenges that the political regime appeared slow to resolve. The murder of President William McKinley was an epitome of the of social revolution portraying the urgency with which the populace wanted some of the social and economic challenges resolved as discussed in the analysis of Eric Rauchway’s Murdering McKinley in the essay below. The historical masterpiece analyses the circumstances in the country prior to the murder of the president, the subsequent speedy apprehension and execution of his murderer, Leon Czolgosz1. The change in the political regime in the country thereafter ended the implementation of some of the policies formulated by McKinley and instigated the Roosevelt progressivism policies that the people believed would solve most of the social and economic problems thereby providing America with a progressive future by creating a conducive environment for the development of the economy. The murder of McKinley thus appears to have been engineered by his successors and the populists who succeeded the government soon after his death. The book analyses such thus providing more insights to the death and the influence of such to the development of the modern day political, economic and social structures in the United States. An industrial America would present better living conditions for the populace. The economy would grow rapidly and the states would grow, as different industries would begin operations thereby employing millions of America. The development of cities as a modern settlement pattern brought people together thereby intensifying integration in the society. However, the American society was grappling with serious social and economic issues that would stifle the industrial revolution. The inability of the different regimes prior to McKinley’s tenure