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Investment strategy debasis chakraborty emba 2014 403503


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Investment strategy debasis chakraborty emba 2014 403503

  1. 1. Debasis Chakraborty - International Business School Investment StrategyIntroductionThe essays is based on numerous financial data , various research data, statistics and marketresearch for last few decades and the objective is to carry out a deep analysis with respect tocurrent complex financial environment and produce an attractive future investment strategy,approach and solutions.I have analysed and considered all the available resources such as statistical and historicaldata, current market situation, political complexity, financial regularity and risk policy in US,Europe and APAC. Investment is complex stuff in current complex economic situation where theGDP growth is very low i.e. <2%. GDP is derived as, GDP = Consumption + Investment +Government spending + (Exports – Imports).Executive SummaryInvestments are influenced and/or govern by four critical factors inflation, deflation, economicexpansion and contraction. And as the economy is changing rapidly, controlling these factors isreally unpredictable. Investment is the individual’s chaise, the factor which drives for aninvestment plan and strategy is risk, how much risk we can take forward.Investment StrategyThe investment strategy is based on inflation protection, equity recovery, emerging marketgrowth, quality defence and the hunt for yield. In the following sections I will discuss moredetails on the various investment strategy and attractive options available. The most importantpart to the investor is to carry out the proper valuation before buying and investing in the market.Attractive Investment Options and AnalysisIn next sections I will discuss various attractive investment options available in the market suchas dividend stocks, stocks, infrastructure bonds, real estate, paying off debt, investment onproperty and infrastructure, global equities and emerging markets.Dividend Stocks is an attractive option, but we need to understand the deeper in to the variousdividends such as cash dividend, property dividend, stock dividend, liquidity dividend etc.Research says that dividend stocks are more preferable as it is relatively risk free. Even WarrenBuffet has also suggested that Dividend Stock is most attractive in current complex economicsituation. Similar research suggests that the investing in to the Securities could be the best longterm strategy. Following are the six types of dividend investing strategies along with a portfoliobased on each strategy• Income Investing (High / Very high current yield; lower DGR)• High Growth Investing (High / Very high DGR; lower current yield)• Long Term Growth Investing (Mid-range current yield; mid-range DGR)• High Yield Investing (Very high current yield; lower DGR)• Income Through Funds Investing (Very high current yield through funds)• Dividend Diversity Investing (A combination of the first four types)Copyright Debasis Chakraborty Scholar Paper – EMBA
  2. 2. Debasis Chakraborty - International Business School Investment StrategyOverall, if we are holding any stock indefinitely it doesnt matter whether the return comes fromthe current yield [CY] or the growth rate of the dividend [DGR]. The overall return is calculatedbased on the sum of the two. This is a version of the Gordon Growth Model which statesValue [of the stock] = Dividend in $/ (required % return - dividend % growth rate).We have illustrated the profitability of Dividend stock in the reference Graph1 to Graph 3.Overall dividend yield and growth in dividends, along with quality and value investment criteria,are at the centre of the investment process of the select Equity and Progressive Yield portfolios.Investing on MNC Stocks is another attractive investment option. The stock is risky and the bestway to invest in the stock is to find out the band value, sustainability and past repudiation. IBMshare has been increased four times in last eight years, Apple share has been increased 10times in last 10 years are few classical examples. S&P 500 stocks are very attractive forinvestment. Big IT and Oil/Gas/Energy stock are more preferred stock, but investment banking,insurance stock is very attractive, even if financial stocks are in high Risk portfolio.Infrastructure Bond is also very attractive investment at growing economy, especially in theemerging market [Graph 7 & Graph 8]. Investing on real estate also a good option and propertyvalues are increasing and there is a growth expecting in infrastructure portfolio such as buildingand highway construction, construction of bridge and setup new rail tracks.As interest rates are going up and up, the paying off of debt is another smart option. Globalequities also a smart option and research says that investment on the emerging market.Buying Gold is another good option as we have observed a huge increased on gold price in lastdecades [Graph 6]Recommendation and ConclusionAfter last couple of year’s recession, US economy is in track [Graph 9] where as Europeaneconomy is still struggling because of economic crisis in Greece, Portugal and Spain, but theencouraging fact is that UK, Germany and Nordics economy is coming in right track. Still it is verycomplex and difficult to predict the future market condition here and high number of country haslower industrial production rate and lo GDP. We have discussed various attractive investmentoptions based on their risk portfolio. A healthy cash-flow is important part of in the business.There are various options as we discussed above and it is up to the investor to find out the rightplace to invest. Therefore investor is required to do a complete study on market before investingon various options available.Acronyms: DWR: Dividend Growth Rate GDP: Gross Domestic ProductCopyright Debasis Chakraborty Scholar Paper – EMBA
  3. 3. Debasis Chakraborty - International Business School Investment StrategyGraph and Financial Chart Graph and Financial ChartGraph 1Graph 2Graph 3DG is Dividend Growth, DR is Dividend Reinvestment ,NF is New FundGraph 4Graph 5Graph 6Best Investment StrategyCopyright Debasis Chakraborty Scholar Paper – EMBA
  4. 4. Debasis Chakraborty - International Business School Investment StrategyGraph 7[Emerging Market Comparative Benchmark Returns]Graph 8Graph 9Graph 10Graph 11Long Term investment strategyCopyright Debasis Chakraborty Scholar Paper – EMBA