1) A study found that when people learn that their choice agrees with expert opinions, the reward center of their brain is activated similarly to when experiencing pleasures like food or money.
2) This suggests that conformity feels intrinsically rewarding on a basic biological level, explaining why investor sentiment can suddenly change as people want to agree with the group.
3) When others value something differently than you initially did, it makes you question your own valuation and want to conform to be part of the group, even if just subconsciously.
Does fund size erode mutual fund performance the role of liquidity and organ...bfmresearch
1) The study investigates how fund size affects mutual fund performance. Using data from 1962-1999, they find that fund returns decline as fund size increases, even after accounting for benchmarks and fund characteristics.
2) They find this negative effect of size on performance is most pronounced for funds that invest in small, illiquid stocks. This suggests liquidity issues related to size are important.
3) Controlling for its own size, a fund's performance is not negatively impacted by the total size of the fund family it belongs to. This indicates scale is not inherently bad and depends on organizational structure.
Fund performance persistence and competition keswanibfmresearch
This document summarizes a study that examines how competition within a sector affects mutual fund performance persistence at the sector level in the UK market. The study uses data on UK unit trusts from 1991-2001 that includes annual returns, assets, and sector classifications. Several variables are constructed to measure competition within each sector, such as the number of funds, proportion of mature funds, and concentration of assets. The main finding is that performance persistence is higher in sectors where concentration of assets under management is higher, indicating less competition is associated with greater persistence. This suggests the degree of persistence exhibited by a sector's funds depends on how competitive that sector is.
Mutual fund performance and manager style by james l. davis(11)bfmresearch
This document provides a 3-sentence summary of the given document:
The document analyzes whether certain investment styles reliably produce abnormal returns for mutual funds and whether fund performance is persistent based on style. It finds that none of the styles studied generated positive abnormal returns compared to benchmarks, with value funds showing negative abnormal returns. There is some evidence that top performing growth managers and worst performing small-cap managers show persistence for a year, but abnormal performance tends to disappear quickly. The results cast doubt on the economic value of active fund management.
How poor stock mkt perf affects fund f lows shriderbfmresearch
1) The document examines how the determinants of mutual fund flows change depending on market conditions, specifically comparing periods of strong market performance to periods of weak performance.
2) Prior research has found that fund flows depend on both absolute and relative performance measures, but different studies have found different performance measures to be most important.
3) The study analyzes mutual fund data from 2001-2002, a period including record inflows and increasing outflows, to test if the determinants of fund flows differ between periods of good versus poor market performance and fund flow changes.
This study explores performance persistence in mutual funds. The authors find:
1) Funds that perform relatively poorly compared to peers and benchmarks are more likely to disappear, indicating survivorship bias can be relevant in mutual fund studies.
2) Mutual fund performance persists from year to year on a risk-adjusted basis, though much of the persistence is due to repeated underperformance relative to benchmarks.
3) Persistence patterns vary dramatically between time periods, suggesting performance is correlated across managers due to common strategies not captured by risk adjustments. Poorly performing funds also persist instead of being fully eliminated by the market.
Should investors avoid active managed funds baksbfmresearch
This document summarizes a study that analyzes mutual fund performance from an investor's perspective. The study develops a Bayesian method to evaluate mutual fund manager performance using flexible prior beliefs about manager skill. It then applies this methodology to over 1,400 mutual funds. The study finds that even with extremely skeptical prior beliefs about manager skill, some allocation to actively managed funds is still economically justified. It quantifies how much investors would lose by completely avoiding active managers.
This document provides an introduction and overview of management handouts that are intended to help professionals, students, staff, and others become better managers. It discusses that management principles can be applied in many spheres of life, not just the office. The handouts will cover topics like behavior and communication, SWOT analysis, goal setting, dealing with subordinates and motivation, success/time/failure management, moral lessons from leaders, project management techniques, and other principles of management illustrated through examples. The document emphasizes that understanding oneself and one's staff is key to effective management and motivation. It provides tips for staff motivation, including knowing yourself and your people, matching jobs to capabilities, effective communication, onboarding new recruits, attention to one's staff
The document discusses how human behavior and emotions can negatively impact investment decision making. It provides three key points:
1) Investors tend to conform to the views of others and the "herd mentality" because agreeing with the group triggers reward centers in the brain. This can cause sudden shifts in market sentiment.
2) Learning that experts agree on the value of an investment, even if you disagree, activates brain regions associated with pain, grabbing our attention.
3) True independent thinking is difficult because conforming feels good biologically and psychologically. Investors are urged to thoroughly research investments independently of market views.
Does fund size erode mutual fund performance the role of liquidity and organ...bfmresearch
1) The study investigates how fund size affects mutual fund performance. Using data from 1962-1999, they find that fund returns decline as fund size increases, even after accounting for benchmarks and fund characteristics.
2) They find this negative effect of size on performance is most pronounced for funds that invest in small, illiquid stocks. This suggests liquidity issues related to size are important.
3) Controlling for its own size, a fund's performance is not negatively impacted by the total size of the fund family it belongs to. This indicates scale is not inherently bad and depends on organizational structure.
Fund performance persistence and competition keswanibfmresearch
This document summarizes a study that examines how competition within a sector affects mutual fund performance persistence at the sector level in the UK market. The study uses data on UK unit trusts from 1991-2001 that includes annual returns, assets, and sector classifications. Several variables are constructed to measure competition within each sector, such as the number of funds, proportion of mature funds, and concentration of assets. The main finding is that performance persistence is higher in sectors where concentration of assets under management is higher, indicating less competition is associated with greater persistence. This suggests the degree of persistence exhibited by a sector's funds depends on how competitive that sector is.
Mutual fund performance and manager style by james l. davis(11)bfmresearch
This document provides a 3-sentence summary of the given document:
The document analyzes whether certain investment styles reliably produce abnormal returns for mutual funds and whether fund performance is persistent based on style. It finds that none of the styles studied generated positive abnormal returns compared to benchmarks, with value funds showing negative abnormal returns. There is some evidence that top performing growth managers and worst performing small-cap managers show persistence for a year, but abnormal performance tends to disappear quickly. The results cast doubt on the economic value of active fund management.
How poor stock mkt perf affects fund f lows shriderbfmresearch
1) The document examines how the determinants of mutual fund flows change depending on market conditions, specifically comparing periods of strong market performance to periods of weak performance.
2) Prior research has found that fund flows depend on both absolute and relative performance measures, but different studies have found different performance measures to be most important.
3) The study analyzes mutual fund data from 2001-2002, a period including record inflows and increasing outflows, to test if the determinants of fund flows differ between periods of good versus poor market performance and fund flow changes.
This study explores performance persistence in mutual funds. The authors find:
1) Funds that perform relatively poorly compared to peers and benchmarks are more likely to disappear, indicating survivorship bias can be relevant in mutual fund studies.
2) Mutual fund performance persists from year to year on a risk-adjusted basis, though much of the persistence is due to repeated underperformance relative to benchmarks.
3) Persistence patterns vary dramatically between time periods, suggesting performance is correlated across managers due to common strategies not captured by risk adjustments. Poorly performing funds also persist instead of being fully eliminated by the market.
Should investors avoid active managed funds baksbfmresearch
This document summarizes a study that analyzes mutual fund performance from an investor's perspective. The study develops a Bayesian method to evaluate mutual fund manager performance using flexible prior beliefs about manager skill. It then applies this methodology to over 1,400 mutual funds. The study finds that even with extremely skeptical prior beliefs about manager skill, some allocation to actively managed funds is still economically justified. It quantifies how much investors would lose by completely avoiding active managers.
This document provides an introduction and overview of management handouts that are intended to help professionals, students, staff, and others become better managers. It discusses that management principles can be applied in many spheres of life, not just the office. The handouts will cover topics like behavior and communication, SWOT analysis, goal setting, dealing with subordinates and motivation, success/time/failure management, moral lessons from leaders, project management techniques, and other principles of management illustrated through examples. The document emphasizes that understanding oneself and one's staff is key to effective management and motivation. It provides tips for staff motivation, including knowing yourself and your people, matching jobs to capabilities, effective communication, onboarding new recruits, attention to one's staff
The document discusses how human behavior and emotions can negatively impact investment decision making. It provides three key points:
1) Investors tend to conform to the views of others and the "herd mentality" because agreeing with the group triggers reward centers in the brain. This can cause sudden shifts in market sentiment.
2) Learning that experts agree on the value of an investment, even if you disagree, activates brain regions associated with pain, grabbing our attention.
3) True independent thinking is difficult because conforming feels good biologically and psychologically. Investors are urged to thoroughly research investments independently of market views.
A Short Guide for Financial Advisors in Helping their Client’s to Better Unde...James Orth
This document provides a summary of common behavioral investing flaws that financial advisors can help clients understand. It discusses concepts like overconfidence, herd mentality, and loss aversion that can lead investors to make irrational decisions. The summary recommends that advisors prepare clients for emotional market reactions by creating predetermined investing strategies. It also suggests advisors educate clients on the benefits of investing cautiously when others are overly optimistic and investing boldly when others are overly pessimistic. Overall, the document stresses the importance of advisors understanding behavioral biases so they can structure clients' portfolios rationally despite emotional tendencies.
A Short Guide for Financial Advisors in Helping their Client’s to Better Unde...James Orth
This document provides a summary of common behavioral investing flaws that financial advisors can help clients understand. It discusses concepts like overconfidence, herd mentality, and loss aversion that can lead investors to make irrational decisions. The summary recommends that advisors prepare clients for emotional market reactions by creating predefined investing strategies. It also suggests advisors educate clients on the benefits of investing cautiously when others are overly optimistic and investing boldly when others are overly pessimistic. Overall, the document stresses the importance of advisors understanding behavioral biases so they can structure clients' portfolios, communications, and decisions in a way that mitigates the influence of emotions on investing.
Learn how to design investment analysis presentations that are easy to understand and will motivate clients to make investment decisions. Participate in hands-on demonstrations of how to use CCIM technology tools for different investment analysis output levels.
This paper examines professional investors can apply the principles within and around Behavioural Finance to maximise investment skill and minimise any negative impact of behavioural bias.
It is well known that the decision-making process within companies presents some critical issues.
The purpose of this brief presentation is to adopt a decision model, starting from what was elaborated by John Boyd and which goes under the name of ‘’O.O.D.A. loop’’.
Joshua Fang, CEO of Fang Asset Management, gave a presentation on investing basics. He began with an introduction of himself and his background. The presentation covered definitions of investing, common investment types like stocks, bonds, real estate, and evaluations. Stocks were discussed in depth, including how individuals and pooled investments work. Fang also provided three stock evaluation methods and his top stock picks, explaining reasons for investing in each. The presentation aimed to give attendees foundational knowledge on different investments and evaluating opportunities.
This document discusses several soft skills important for career success, including body language, analytical skills, and critical thinking. It provides details on each:
Body language conveys nonverbal cues like facial expressions and posture. The document lists 7 steps to understand meanings in body language, such as how different eye movements and head positions communicate different attitudes.
Analytical skills involve applying logic to gather and analyze information to make well-informed decisions. The document gives 5 tips to improve these skills, such as asking the right questions, making no assumptions, and turning information into real knowledge.
Critical thinking requires actively conceptualizing and evaluating information to reach valid conclusions. It outlines core skills like observation and interpretation, and the procedure of
Can Traditional Active Management Be Saved?Clare Levy
Active managers need to start incorporating the lessons of behavioural science if they have a chance of reversing the flow of assets into passive investment vehicles. Eric Rovick highlights some of the areas of cognitive risk evident in active investment management and provides a managerial and operational framework for addressing them.
This document discusses logical thinking strategies. It defines thinking as the mental manipulation of information to form concepts or solve problems in order to make firm decisions. Logical thinking involves observing phenomena and analyzing reactions and feedback to draw evidence-based conclusions. Logical thinking skills are important for self-improvement and effective decision making. There are two types of logical arguments: deductive reasoning uses specific premises to reach a specific conclusion, while inductive reasoning establishes rules based on repeated experiences but conclusions may not be accurate. The document provides tips for improving logical thinking skills such as questioning information sources, adjusting perspectives, and organizing information to identify relationships and determine high value pieces.
Mr. Siddique has various intellectual, physical, and other abilities that help him succeed professionally and socially. His intellectual abilities like verbal comprehension, inductive reasoning, and memory aid his work as an accountant and lecturer. Physical abilities such as dynamic strength and stamina support his job duties. Socially, abilities including verbal comprehension, perceptual speed, and inductive reasoning make him acceptable. Abilities in areas like perceptual speed, inductive reasoning, and various physical abilities assist his hobbies of travel, golf, and tennis. Maintaining a high standard of living requires effective time management and use of multiple capacities.
Ratio analysis is used to evaluate a company's financial performance and health over time. It involves calculating and comparing various financial ratios to identify trends, strengths, weaknesses and how the company compares to its competitors. Some key points:
1. Ratios are calculated using figures from financial statements and compare metrics like profitability, liquidity, operating efficiency and financial strength.
2. Ratio analysis helps evaluate areas like a company's short-term solvency, profitability, operating efficiency, and long-term financial stability.
3. Comparing ratios over time and against industry benchmarks provides insight into a company's financial management and performance relative to its peers.
4. Various considerations must be made when interpreting
Internal Social Media: Weaving the threads togetherDavid Thompson
Brief overview of the work of the U.S. Social Media Advisory Committee at Boehringer Ingelheim Pharmaceuticals, Inc. This was presented at the Social Media for Pharm conference in New York City, December 7th 2011
This document discusses decision making under uncertainty. It provides definitions of decision making and outlines an 8 step decision making process. It also defines risk, certainty and uncertainty and how decisions are made under each condition. The document then provides a case study of the mobile network operator Zong, outlining its vision, mission, organizational structure and conducting a SWOT analysis. It concludes that decision making is important for organizations and managers often face risk and uncertainty. It recommends strategies to improve decision making under uncertainty.
This document discusses decision making under uncertainty. It provides definitions of decision making and outlines an 8 step decision making process. It also defines risk, certainty and uncertainty and how decisions are made under each condition. The document then provides a case study of the mobile network operator Zong, outlining its vision, mission, organizational structure and performing a SWOT analysis. It concludes that decision making is important for organizations and managers often face risk and uncertainty. It recommends strategies to improve decision making under uncertainty.
This document discusses conducting a feasibility study for a social enterprise. It provides guidance on assessing key factors such as market needs, organizational structure, and financial and technological requirements. The document emphasizes that a feasibility study should determine if there are any "make or break" issues that could prevent a business idea from succeeding in the marketplace before investing significant time and resources into a full business plan. It outlines important topics to address, such as market demand, competition, location, management structure, staffing needs, costs and technology requirements. The goal is to identify and address any potential roadblocks or weaknesses early in the planning process.
The document discusses an individual's experience leading a group project. The individual initially did not see themselves as a leader but became interested in the project topic of long term shareholder wealth maximization. They eventually took on the leader role after no one else stepped up. Through meetings and learning about the concepts, the individual was able to help their team advance the project by focusing on understanding the concepts rather than just completing tasks. The document also summarizes differences between intrinsic and market company values that can lead to stock bubbles or unique buying opportunities. It provides details on a potential rental property including location, specifications, estimated costs and financing. Finally, it discusses refined concepts for the group related to avoiding pitfalls and maximizing success.
This document summarizes an upcoming presentation on ethics versus business interests in project management. The presentation will use case studies and examples from professional forums to illustrate common ethical dilemmas project managers may face at different stages of a project's lifecycle. It will also discuss how ethical standards may vary in different regions and industries. The goal is for project managers to learn how to recognize and address potential ethical issues so they are prepared to handle similar situations in the future.
The document discusses several scenarios where project managers may encounter ethical dilemmas when business interests conflict with ethical conduct. It presents cases where a project manager is asked not to inform a client about a key resource leaving [1], making fraudulent claims in a project proposal [2], and overpromising requirements during sales to secure an order [3]. Comments from project management professionals emphasize the importance of transparency, not overstating capabilities, and ensuring client expectations are managed to build long-term credibility over short-term gains. Upholding ethics is suggested to facilitate successful project execution and establish trust.
My Worst Day Essay. Cherish What you Have, I still remember the worst day of ...Nicole Heinen
My Worst Day Of School Experience Narrative Essay Example - 100, 200 Words. Argumentative Essay: My worst day essay. The Worst Day Of My Life: Essay Example, 895 words GradesFixer. The Day Everything Went Wrong Essay Example StudyHippo.com. 018 Worst College Essays Essay Example Contractions In Admission .... My Worst Day Essay Telegraph. The worst day of my life - GCSE English - Marked by Teachers.com. The Most Disastrous Day Ever Free Essay Example. The worst week of my life - GCSE English - Marked by Teachers.com. The Worst Day Ever - 396 Words Free Essay Example on GraduateWay. My worst day essay. My Worst Day Of School Experience Narrative Essay .... Descriptive essay the worst day of my life. The Worst Day of My Life Essay Example Topics and Well Written Essays .... The Worst Day Of My Life - The Worst Day Of My Life Poem by Ivory Strife. The Worst Day of My Life. - GCSE English - Marked by Teachers.com. Argumentative essay on the worst day - 866 Words - NerdySeal. MY WORST DAY EVER - ESL worksheet by ALI ALI. A horrible experience essay. Personal Essay : My Worst Class .... Narrative Essay: The worst day of my life short essay. Cherish What you Have, I still remember the worst day of my life, the .... Write a narrative essay about the worst day of my life - Essay on The .... My worst day ever essay. My Worst Day Ever Essay, Essay Buy Sample .... The Worst Day of my Life: My Family Tragedy Free Essay Example. an essay on a terrible day - Brainly.in. iUgo Writing on a theme of a bad day by Marie Langley. My worst day essay - PV Plus My Worst Day Essay My Worst Day Essay. Cherish What you Have, I still remember the worst day of my life, the ...
A key aspect of successful lawyering involves empathy and the EQ-i 2.0 assessment helps lawyers tap into development opportunities. Once known, a development plan can chart the pathway to increasing self-understanding, improving empathy skills, and providing more excellent legal service to clients.
This document summarizes a study examining 125 equity mutual funds that closed to new investment between 1993 and 2004. The study tests three hypotheses about why funds close: 1) The "good steward" hypothesis argues funds close to restrict inflows and maintain performance, and will perform well after reopening. 2) The "cheap talk" hypothesis posits closing has no real cost if fees increase and existing investors contribute, compensating managers. 3) The "family spillover" hypothesis claims closing diverts attention to other funds in the same family. The study finds little support for good steward performance, but evidence managers raise fees consistent with cheap talk, and little family benefit except briefly around closure.
Standard & poor's 16768282 fund-factors-2009 jan1bfmresearch
This document summarizes a study by Standard & Poor's on factors that predict investment fund performance. The study analyzed both qualitative factors like fund size, expenses, and age as well as quantitative metrics like Jensen's alpha and information ratio. The key findings were:
- For developed markets, larger funds with lower expenses tended to outperform. But for emerging markets, smaller funds did better due to differences in liquidity.
- Jensen's alpha and information ratio best predicted future performance of developed market equity funds over shorter time periods.
- Past performance was informative over 2 years but less so over 1 year due to noise. Fund selection should focus on factors predicting shorter term outperformance.
A Short Guide for Financial Advisors in Helping their Client’s to Better Unde...James Orth
This document provides a summary of common behavioral investing flaws that financial advisors can help clients understand. It discusses concepts like overconfidence, herd mentality, and loss aversion that can lead investors to make irrational decisions. The summary recommends that advisors prepare clients for emotional market reactions by creating predetermined investing strategies. It also suggests advisors educate clients on the benefits of investing cautiously when others are overly optimistic and investing boldly when others are overly pessimistic. Overall, the document stresses the importance of advisors understanding behavioral biases so they can structure clients' portfolios rationally despite emotional tendencies.
A Short Guide for Financial Advisors in Helping their Client’s to Better Unde...James Orth
This document provides a summary of common behavioral investing flaws that financial advisors can help clients understand. It discusses concepts like overconfidence, herd mentality, and loss aversion that can lead investors to make irrational decisions. The summary recommends that advisors prepare clients for emotional market reactions by creating predefined investing strategies. It also suggests advisors educate clients on the benefits of investing cautiously when others are overly optimistic and investing boldly when others are overly pessimistic. Overall, the document stresses the importance of advisors understanding behavioral biases so they can structure clients' portfolios, communications, and decisions in a way that mitigates the influence of emotions on investing.
Learn how to design investment analysis presentations that are easy to understand and will motivate clients to make investment decisions. Participate in hands-on demonstrations of how to use CCIM technology tools for different investment analysis output levels.
This paper examines professional investors can apply the principles within and around Behavioural Finance to maximise investment skill and minimise any negative impact of behavioural bias.
It is well known that the decision-making process within companies presents some critical issues.
The purpose of this brief presentation is to adopt a decision model, starting from what was elaborated by John Boyd and which goes under the name of ‘’O.O.D.A. loop’’.
Joshua Fang, CEO of Fang Asset Management, gave a presentation on investing basics. He began with an introduction of himself and his background. The presentation covered definitions of investing, common investment types like stocks, bonds, real estate, and evaluations. Stocks were discussed in depth, including how individuals and pooled investments work. Fang also provided three stock evaluation methods and his top stock picks, explaining reasons for investing in each. The presentation aimed to give attendees foundational knowledge on different investments and evaluating opportunities.
This document discusses several soft skills important for career success, including body language, analytical skills, and critical thinking. It provides details on each:
Body language conveys nonverbal cues like facial expressions and posture. The document lists 7 steps to understand meanings in body language, such as how different eye movements and head positions communicate different attitudes.
Analytical skills involve applying logic to gather and analyze information to make well-informed decisions. The document gives 5 tips to improve these skills, such as asking the right questions, making no assumptions, and turning information into real knowledge.
Critical thinking requires actively conceptualizing and evaluating information to reach valid conclusions. It outlines core skills like observation and interpretation, and the procedure of
Can Traditional Active Management Be Saved?Clare Levy
Active managers need to start incorporating the lessons of behavioural science if they have a chance of reversing the flow of assets into passive investment vehicles. Eric Rovick highlights some of the areas of cognitive risk evident in active investment management and provides a managerial and operational framework for addressing them.
This document discusses logical thinking strategies. It defines thinking as the mental manipulation of information to form concepts or solve problems in order to make firm decisions. Logical thinking involves observing phenomena and analyzing reactions and feedback to draw evidence-based conclusions. Logical thinking skills are important for self-improvement and effective decision making. There are two types of logical arguments: deductive reasoning uses specific premises to reach a specific conclusion, while inductive reasoning establishes rules based on repeated experiences but conclusions may not be accurate. The document provides tips for improving logical thinking skills such as questioning information sources, adjusting perspectives, and organizing information to identify relationships and determine high value pieces.
Mr. Siddique has various intellectual, physical, and other abilities that help him succeed professionally and socially. His intellectual abilities like verbal comprehension, inductive reasoning, and memory aid his work as an accountant and lecturer. Physical abilities such as dynamic strength and stamina support his job duties. Socially, abilities including verbal comprehension, perceptual speed, and inductive reasoning make him acceptable. Abilities in areas like perceptual speed, inductive reasoning, and various physical abilities assist his hobbies of travel, golf, and tennis. Maintaining a high standard of living requires effective time management and use of multiple capacities.
Ratio analysis is used to evaluate a company's financial performance and health over time. It involves calculating and comparing various financial ratios to identify trends, strengths, weaknesses and how the company compares to its competitors. Some key points:
1. Ratios are calculated using figures from financial statements and compare metrics like profitability, liquidity, operating efficiency and financial strength.
2. Ratio analysis helps evaluate areas like a company's short-term solvency, profitability, operating efficiency, and long-term financial stability.
3. Comparing ratios over time and against industry benchmarks provides insight into a company's financial management and performance relative to its peers.
4. Various considerations must be made when interpreting
Internal Social Media: Weaving the threads togetherDavid Thompson
Brief overview of the work of the U.S. Social Media Advisory Committee at Boehringer Ingelheim Pharmaceuticals, Inc. This was presented at the Social Media for Pharm conference in New York City, December 7th 2011
This document discusses decision making under uncertainty. It provides definitions of decision making and outlines an 8 step decision making process. It also defines risk, certainty and uncertainty and how decisions are made under each condition. The document then provides a case study of the mobile network operator Zong, outlining its vision, mission, organizational structure and conducting a SWOT analysis. It concludes that decision making is important for organizations and managers often face risk and uncertainty. It recommends strategies to improve decision making under uncertainty.
This document discusses decision making under uncertainty. It provides definitions of decision making and outlines an 8 step decision making process. It also defines risk, certainty and uncertainty and how decisions are made under each condition. The document then provides a case study of the mobile network operator Zong, outlining its vision, mission, organizational structure and performing a SWOT analysis. It concludes that decision making is important for organizations and managers often face risk and uncertainty. It recommends strategies to improve decision making under uncertainty.
This document discusses conducting a feasibility study for a social enterprise. It provides guidance on assessing key factors such as market needs, organizational structure, and financial and technological requirements. The document emphasizes that a feasibility study should determine if there are any "make or break" issues that could prevent a business idea from succeeding in the marketplace before investing significant time and resources into a full business plan. It outlines important topics to address, such as market demand, competition, location, management structure, staffing needs, costs and technology requirements. The goal is to identify and address any potential roadblocks or weaknesses early in the planning process.
The document discusses an individual's experience leading a group project. The individual initially did not see themselves as a leader but became interested in the project topic of long term shareholder wealth maximization. They eventually took on the leader role after no one else stepped up. Through meetings and learning about the concepts, the individual was able to help their team advance the project by focusing on understanding the concepts rather than just completing tasks. The document also summarizes differences between intrinsic and market company values that can lead to stock bubbles or unique buying opportunities. It provides details on a potential rental property including location, specifications, estimated costs and financing. Finally, it discusses refined concepts for the group related to avoiding pitfalls and maximizing success.
This document summarizes an upcoming presentation on ethics versus business interests in project management. The presentation will use case studies and examples from professional forums to illustrate common ethical dilemmas project managers may face at different stages of a project's lifecycle. It will also discuss how ethical standards may vary in different regions and industries. The goal is for project managers to learn how to recognize and address potential ethical issues so they are prepared to handle similar situations in the future.
The document discusses several scenarios where project managers may encounter ethical dilemmas when business interests conflict with ethical conduct. It presents cases where a project manager is asked not to inform a client about a key resource leaving [1], making fraudulent claims in a project proposal [2], and overpromising requirements during sales to secure an order [3]. Comments from project management professionals emphasize the importance of transparency, not overstating capabilities, and ensuring client expectations are managed to build long-term credibility over short-term gains. Upholding ethics is suggested to facilitate successful project execution and establish trust.
My Worst Day Essay. Cherish What you Have, I still remember the worst day of ...Nicole Heinen
My Worst Day Of School Experience Narrative Essay Example - 100, 200 Words. Argumentative Essay: My worst day essay. The Worst Day Of My Life: Essay Example, 895 words GradesFixer. The Day Everything Went Wrong Essay Example StudyHippo.com. 018 Worst College Essays Essay Example Contractions In Admission .... My Worst Day Essay Telegraph. The worst day of my life - GCSE English - Marked by Teachers.com. The Most Disastrous Day Ever Free Essay Example. The worst week of my life - GCSE English - Marked by Teachers.com. The Worst Day Ever - 396 Words Free Essay Example on GraduateWay. My worst day essay. My Worst Day Of School Experience Narrative Essay .... Descriptive essay the worst day of my life. The Worst Day of My Life Essay Example Topics and Well Written Essays .... The Worst Day Of My Life - The Worst Day Of My Life Poem by Ivory Strife. The Worst Day of My Life. - GCSE English - Marked by Teachers.com. Argumentative essay on the worst day - 866 Words - NerdySeal. MY WORST DAY EVER - ESL worksheet by ALI ALI. A horrible experience essay. Personal Essay : My Worst Class .... Narrative Essay: The worst day of my life short essay. Cherish What you Have, I still remember the worst day of my life, the .... Write a narrative essay about the worst day of my life - Essay on The .... My worst day ever essay. My Worst Day Ever Essay, Essay Buy Sample .... The Worst Day of my Life: My Family Tragedy Free Essay Example. an essay on a terrible day - Brainly.in. iUgo Writing on a theme of a bad day by Marie Langley. My worst day essay - PV Plus My Worst Day Essay My Worst Day Essay. Cherish What you Have, I still remember the worst day of my life, the ...
A key aspect of successful lawyering involves empathy and the EQ-i 2.0 assessment helps lawyers tap into development opportunities. Once known, a development plan can chart the pathway to increasing self-understanding, improving empathy skills, and providing more excellent legal service to clients.
This document summarizes a study examining 125 equity mutual funds that closed to new investment between 1993 and 2004. The study tests three hypotheses about why funds close: 1) The "good steward" hypothesis argues funds close to restrict inflows and maintain performance, and will perform well after reopening. 2) The "cheap talk" hypothesis posits closing has no real cost if fees increase and existing investors contribute, compensating managers. 3) The "family spillover" hypothesis claims closing diverts attention to other funds in the same family. The study finds little support for good steward performance, but evidence managers raise fees consistent with cheap talk, and little family benefit except briefly around closure.
Standard & poor's 16768282 fund-factors-2009 jan1bfmresearch
This document summarizes a study by Standard & Poor's on factors that predict investment fund performance. The study analyzed both qualitative factors like fund size, expenses, and age as well as quantitative metrics like Jensen's alpha and information ratio. The key findings were:
- For developed markets, larger funds with lower expenses tended to outperform. But for emerging markets, smaller funds did better due to differences in liquidity.
- Jensen's alpha and information ratio best predicted future performance of developed market equity funds over shorter time periods.
- Past performance was informative over 2 years but less so over 1 year due to noise. Fund selection should focus on factors predicting shorter term outperformance.
Performance emergingfixedincomemanagers joi_is age just a numberbfmresearch
1) Younger fixed-income managers tend to outperform older, more established managers in terms of gross returns. Returns are significantly higher for emerging managers in their first year and first five years compared to later years.
2) The study examines 54 fixed-income managers formed since 1985 that had majority employee ownership. Most were formed before 2000, when barriers to entry increased.
3) Business risk is low for emerging managers, as only 6.8% of the 88 examined managers are no longer in business. Higher first-year and early-period returns for emerging managers indicate they provide alpha during their hungry startup phase.
This document analyzes different categories of active mutual fund management based on measures of Active Share and tracking error. It finds that the most active stock pickers have outperformed their benchmarks after fees, while closet indexers and funds focusing on factor bets have underperformed after fees. Performance patterns were similar during the 2008-2009 financial crisis. Closet indexing has become more popular recently. Fund performance can be predicted by cross-sectional stock return dispersion, favoring active stock pickers when dispersion is higher.
The document summarizes findings from the Standard & Poor's Indices Versus Active Funds (SPIVA) Scorecard, which compares the performance of actively managed mutual funds to relevant benchmarks. Some key points:
- Over the past 3 years, the majority (over 50%) of actively managed large-cap, mid-cap, small-cap, global, international, and emerging market funds underperformed their benchmarks.
- Over the past 5 years, indices outperformed a majority of active managers in nearly all major domestic and international equity categories based on equal-weighted returns. Asset-weighted averages also showed underperformance in 11 out of 18 domestic categories.
- For fixed income funds, over 50% under
This document summarizes research on the relationship between portfolio turnover and investment performance. Recent studies have found no evidence that higher portfolio turnover leads to lower returns, as was previously thought. Trading costs have declined over time, and portfolio turnover is not a good proxy for actual trading costs, which depend more on trade size and type of security traded. A 2007 study directly estimated trading costs and found no clear correlation between costs and returns. The author's own analysis of mutual funds from 2007-2008 also found little relationship between turnover and performance. Therefore, advisors should not assume higher turnover means lower returns.
This document discusses using active share and tracking error as measures of portfolio manager skill. It defines active share as the percentage of a fund's portfolio that differs from its benchmark index. Tracking error measures systematic factor risk by capturing how much a fund's returns vary from its benchmark. Research shows funds with high active share and moderate tracking error tend to outperform on average. The document examines how active share and tracking error can help identify skillful managers by focusing on their portfolio construction process rather than just past returns.
This document is a guide to the markets published by JPMorgan that provides data and analysis across various asset classes including equities, fixed income, international markets, and the economy. It includes sections on returns by investment style and sector for equities, economic indicators and drivers, interest rates and other data for fixed income, international market returns and valuations, and asset class performance and correlations. The guide contains over 60 charts and analyses global and domestic financial trends and investment opportunities.
The document discusses whether the concept of "Alpha" is a useful performance metric for investors. It makes two main arguments:
1) Alpha alone does not determine if a portfolio has superior risk-adjusted returns, as portfolio volatility and correlation to benchmarks also influence risk-adjusted returns.
2) Alpha is dependent on leverage - a higher reported Alpha could simply be due to using leverage rather than superior investment skill.
The document concludes that Alpha is a misleading performance measure and not suitable as the sole metric, especially for investors concerned with total risk and returns rather than just a single return component.
Fis group study on emerging managers performance drivers 2007bfmresearch
This study examined the performance of emerging investment managers over three years ending in 2006. It found that:
1) For large cap managers, increased firm assets were negatively correlated with risk-adjusted returns for core and growth strategies, but not for value. This may be because increased assets led to less concentrated core portfolios, lowering returns.
2) For small cap managers, risk-adjusted returns were highest for firms with less than $500 million in assets, possibly due to added resources like analysts. Returns leveled off between $500 million and $1 billion, and declined above $1 billion.
3) Having more research analysts was consistently positively correlated with higher risk-adjusted returns across strategies, while the impact
The document discusses Barclays' process for evaluating and selecting investment managers. It states that identifying the right asset allocation and implementing it properly are both important for achieving investment goals. The process involves both science, through a formal and structured methodology, and art, by applying judgment and philosophy. Barclays aims to identify managers most likely to perform well through rigorous due diligence and ongoing monitoring. The paper will explain Barclays' comprehensive approach to manager analysis, selection, and review.
Active managementmostlyefficientmarkets fajbfmresearch
This survey of literature on active vs passive management shows:
1) On average, actively managed funds do not outperform the market after accounting for fees and expenses, though a minority do add value.
2) Studies suggest some investors may be able to identify superior active managers in advance using public information.
3) Investors who identify superior active managers could improve their risk-adjusted returns by including some exposure to active strategies.
This document summarizes recent academic research on active equity managers who deliver persistent outperformance. It discusses studies finding that:
1) While the average equity manager underperforms after fees, a minority of managers have demonstrated persistent outperformance that cannot be attributed to chance alone.
2) Managers with higher "active share" (the degree to which their portfolio composition differs from the benchmark) tend to generate greater risk-adjusted returns.
3) Managers with lower portfolio turnover and a focus on strong stock selection, rather than market timing, are more likely to outperform over time.
The document evaluates how Brown Advisory's investment approach aligns with the characteristics identified in these studies as being associated with persistent
The document discusses China's transition to a consumer-driven economy. It provides analysis from CLSA China Macro Strategist Andy Rothman on trends in China's economy including the declining importance of exports, strong growth in domestic consumption, increasing incomes driving spending, and continued growth in infrastructure investment. The analysis suggests China's economy remains healthy and growing despite slowing external demand.
This report provides an analysis of defined contribution retirement plans based on 2010 Vanguard recordkeeping data. Some key findings include:
- Median and average account balances reached their highest levels since tracking began in 1999, recovering from market declines.
- Use of target-date funds as investment options and default investments continues to grow significantly, with 42% of participants using them and 20% wholly invested in a single target-date fund.
- Professionally managed investment options like target-date funds are being used by an increasing number of participants, with 29% solely invested in an automatic investment program in 2010 compared to just 9% in 2005.
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive function. Exercise causes chemical changes in the brain that may help protect against mental illness and improve symptoms.
This study examines persistence in mutual fund performance over 1962-1993 using a survivorship-bias-free database. The author finds:
1) Common factors in stock returns and differences in mutual fund expenses explain almost all persistence in mutual fund returns, with the exception of strong underperformance by the worst-performing funds.
2) The "hot hands effect" documented in prior literature is driven by the one-year momentum effect in stock returns, but individual funds do not earn higher returns from actively following momentum strategies after accounting for costs.
3) Expenses have a negative impact on performance of at least one-for-one, and higher turnover also negatively impacts performance, reducing returns by around 0.95
This paper examines the relationship between mutual fund manager ownership stakes in the funds they manage and the performance of those funds. The author hypothesizes that greater manager ownership will be positively associated with fund returns and negatively associated with fund turnover, as higher ownership would better align manager and shareholder interests by reducing agency costs. Using a dataset of manager ownership disclosures from 2004-2005, the author finds that funds with higher manager ownership had higher returns and lower turnover, supporting the hypotheses. However, manager ownership was not related to a fund's tax burden.
Information ratio mgrevaluation_bossertbfmresearch
This document discusses using the Information Ratio (IR) to evaluate mutual fund managers. The IR measures excess return over a benchmark relative to excess return volatility. While commonly used, the IR has limitations that depend on benchmark choice, data frequency, and fund return distributions. The document aims to empirically analyze IR characteristics across different asset classes and countries to determine if it is a reliable performance measure or if guidelines are needed for its use.
This document summarizes a study comparing the performance of mutual funds managed by individual managers versus teams of managers. The study finds that funds managed by teams have similar risk-adjusted performance to individually-managed funds, despite team-managed funds growing at a faster rate. Additionally, team-managed funds have significantly lower risk, lower cross-sectional performance differences, lower expenses, and lower portfolio factor loadings than individually-managed funds. The study uses a large sample of domestic and international mutual funds to test these findings.
Discover the Future of Dogecoin with Our Comprehensive Guidance36 Crypto
Learn in-depth about Dogecoin's trajectory and stay informed with 36crypto's essential and up-to-date information about the crypto space.
Our presentation delves into Dogecoin's potential future, exploring whether it's destined to skyrocket to the moon or face a downward spiral. In addition, it highlights invaluable insights. Don't miss out on this opportunity to enhance your crypto understanding!
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TEST BANK Principles of cost accounting 17th edition edward j vanderbeck mari...Donc Test
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Every business, big or small, deals with outgoing payments. Whether it’s to suppliers for inventory, to employees for salaries, or to vendors for services rendered, keeping track of these expenses is crucial. This is where payment vouchers come in – the unsung heroes of the accounting world.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
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OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
Abhay Bhutada, the Managing Director of Poonawalla Fincorp Limited, is an accomplished leader with over 15 years of experience in commercial and retail lending. A Qualified Chartered Accountant, he has been pivotal in leveraging technology to enhance financial services. Starting his career at Bank of India, he later founded TAB Capital Limited and co-founded Poonawalla Finance Private Limited, emphasizing digital lending. Under his leadership, Poonawalla Fincorp achieved a 'AAA' credit rating, integrating acquisitions and emphasizing corporate governance. Actively involved in industry forums and CSR initiatives, Abhay has been recognized with awards like "Young Entrepreneur of India 2017" and "40 under 40 Most Influential Leader for 2020-21." Personally, he values mindfulness, enjoys gardening, yoga, and sees every day as an opportunity for growth and improvement.
In a tight labour market, job-seekers gain bargaining power and leverage it into greater job quality—at least, that’s the conventional wisdom.
Michael, LMIC Economist, presented findings that reveal a weakened relationship between labour market tightness and job quality indicators following the pandemic. Labour market tightness coincided with growth in real wages for only a portion of workers: those in low-wage jobs requiring little education. Several factors—including labour market composition, worker and employer behaviour, and labour market practices—have contributed to the absence of worker benefits. These will be investigated further in future work.
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For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
2. Understanding Behavioral Humans can’t analyze all the
Finance-Rationality & information received
Decision Making
Behavioral Economics explains how the Please find below a one-minute video.
process of decision making functions among
common people. It elaborates on the role of
emotions and vision. Video: Selective Attention Test
We use vision more in the day than we do
anything else, so we are good at it. But the
truth is that our vision tricks us. If we have
these repeatable mistakes in vision which we This video shows that human attention is
are good at, what are the chances we don’t limited and that we can’t analyze all the
make more mistakes in that we are not good information we receive.
at, ex. financial decision making?
Do you want to know how powerfully
illusive our vision is and how it dominates We tend to pick the information that we
our decisions? need to prove that our thinking is correct. If
we are bullish and long the financial market,
we tend to read bullish reports. Individuals
See the entire Newsletter at:
Newsletter, January 2011
have a tendency to simplify decisions (good
company -> good investment, momentum
strategies -> chasing performance).
Furthermore, investors believe their
information is correct and they are better at
If you want to learn more about interpreting information and making
behavioral finance and the role of decisions. We have an inability to fully
Psychology, here is a long and incorporate new information into risk and
popular video (viewed 28,000 return forecasts. The failure to recognize the
times!) of a class of Robert Shiller, true risk of an investment makes us trade
Professor of Economics at Yale more frequently than can be justified by the
University.
information. Also, we tend to remember
only the good decisions so our memories
Behavioral Finance : The Role of
don’t disagree with our opinion on our
Psychology
abilities.
Refer to “We are all Predictability
Irrational - Dan Ariely” on YouTube
link:
We are All Predictably Irrational
2
3.
See More tricks at:
The Human
Brain…tricks us
whenever it can!
3
4.
Challenges in Financial
Investment Decision
Advising From the Scope
of Behavioral Finance
Making
In today’s world, especially after the recent Since many of you like Behavioral Finance
financial meltdown, understanding the research to help you improve your decision
human emotions and sentiments before making process,
investing money is capturing interests of
researchers and advisers. We too continue
our long love with Behavioral Finance and
present you some interesting findings by Please find the Newsletter
researchers in this area. « Investment Decision Making » at:
Newsletter, May 2011
Please see the Newsletter to learn
more about:
Newsletter, July 2011 You will find some information about:
• Intuitive and Reflective Minds • Asset Allocation
• Investor Paralysis • Information Overload
• Lack of Investor Discipline • The Effect of Myopia and Loss
Aversion on Risk Taking
• Regaining and Maintaining Trust
• Making Intelligent Decisions
• Overcoming Loss Aversion
• The practices that an investor
• Overcoming Procrastination should try to follow
• The Ulysses Strategy • Some things that an investor
should try not to engage in
Countries and Culture in Behavioral Finance
Have you analyzed why Chinese exhibit higher risk tolerance than Americans? Have you ever
wondered how Muslims invest money? And did you know a country’s corruption level has an
impact on its own diplomats?
Asians, Americans, Europeans, Africans, Australians… The world is a mix of people from these
continents with different ideologies and cultures. But what is fascinating is that there is
something which is common between these diverse cultures. Guess what? It is MONEY!
Find all the answers at: Newsletter, June 2011
4
5. We can summarize some of the practices that should be followed:
· Financial advisers need to probe their clients more about their culture. Also important is
to know the client’s obligations towards others. Individualistic and collectivistic groups have
different styles of thinking. This reflected in their investment decisions.
· Continuously strive to learn more about investing.
· Understand the complexities in investing. The adviser will have to do more research and
be sure that he does not fail his fiduciary duty.
· Saving rates depend a lot on culture. It is important to understand your culture before
you make investment decisions. Higher saving rates cultures are more risk tolerant that low
saving rate cultures.
· Many investors exhibit different abilities and willingness towards risk. Always honor the
willingness to risk because the investor feels comfortable if his risk level is under his/her
control.
Human Brain and Decision-Making
We can point to some general practices that can • Avoiding making any important investment
help investors improve their investment decision decision while being in a passive state of
making: mind.
• Thinking more analytically when making
important financial decisions. • Creating a balance between being patient
and being dynamic about investment
choices.
• Being pro-active, curious and non-
assumptive at all times and spending time to
evaluate investments, possible risks and
benefits.
Let’s see the Newsletter « Human
Brain and Decision-Making » for
• Continuously striving towards improving
more information, August 2011
self-control and avoiding hastiness.
5
6. Be Aware of your Emotions
Train Your Brain to Win Big
- Step Away from Yourself -
The Flaws of our Financial
Memory
When Playing the investing game, it’s easy
to let your impulse make all the wrong See
the
entire
Newsletter
at:
moves. Learning to trick yourself can help. Newsletter,
November
2011
Why do smart people do such stupid things
with their money? The answer often lies in
neuroeconomics, a hybrid of neuroscience, · Be aware of your own emotions
economics, and psychology that drills down and cognitive traps to make smarter
to the biological bedrock of decision- decisions.
making.
· Step away from yourselves to be
Even when we think we are being rational, more rational.
we are often driven by impetuous emotions
of which we are barely conscious. Therefore, · Remember that we unconsciously
the keys to investing success, whether it’s for make decisions based on positive
retirement or just for fun, are strategies and memories.
tricks to prevent the heat of the moment
from melting your better judgment. · Learn about financial history to
reduce the number of mistakes. Do
not extrapolate recent past.
Ten Tricks for Better Investing:
· Keep a well-diversified portfolio
T ake the Global View and an investment diary.
H ope for the Best-But Expect the Worst
I nvestigate Then Invest · Have a Financial Plan.
N ever Say Always
K now What you Don’t Know
“when we’re feeling good.
T he Past Is Not a Prologue Complex decisions, involving
W eigh What They Say
I f it Sounds Too Good to Be True, It multiple options… demand our
Probably Is best thinking. Yet those very
C osts are Killers
E ggs Go Splat
decisions seem to induce in us
emotional reactions that impair
our ability to do just the kind of
The article: Train your Brain to Win thinking that is necessary.”
Barry Schwartz
6
7. So That's Why Investors
In the experiment, researchers from
Can't Think for Themselves University College London and Aarhus
University in Denmark asked 28 people to
submit a list of songs they wanted to buy
online and then to decide which they
would most like to own. Then the
From February through May, the Dow participants viewed the ratings of the
Jones Industrial Average gained more same songs by two professional music
than 1000 points in an almost experts. Meanwhile, a magnetic resonance
uninterrupted daily march upward. Then imaging machine recorded the patterns of
came the "flash crash" of May 6 and day activity in their brains. Finally, as a way to
after day of losses through May. Now, in measure the influence of the experts'
mid-June, the market has been up six of views, the participants had the chance to
the past seven days. change their minds about which songs
they wanted the most.
What accounts for these sudden moves?
Why do investors so often seem to
The brain scans showed that as soon as
resemble a school of fish, all changing
people learned they had chosen the same
direction together?
song as the experts, cells in the ventral
Sometimes the most interesting answers
striatum—a reward center wired with
to financial questions come from
dopamine neurons that
scientific labs. A study
respond to pleasures like
published in the journal
Current Biology found that "When someone sugar and sex—fired
intensely.
the value you place on influences you, it
something is likely to go up happens very quickly,
when other people tell you it "If someone agrees with
is worth more than you in under a second," your choice, it's
thought, and down when intrinsically rewarding in
others say it is worth less. Daniel Campbell- the same way food or
money is rewarding,"
More strikingly, if your Meiklejohn
says one of the
evaluation agrees with what
others tell you, then a part of experimenters, Chris
your brain that specializes in Frith of University
processing rewards kicks College London.
into high gear.
Why might other people's estimates of
In other words, investors often go along what something is worth lead you to
with the crowd because—at the most change your own? Their appraisal could
basic biological level—conformity feels make you unsure that yours is correct.
good. Moving in herds doesn't just give You might become more popular once
investors a sense of "safety in numbers." you agree with others, or joining the
It also gives them pleasure. experts may make you feel like one
yourself. "We are very social creatures,"
That may help explain why market says Prof. Frith, "and we are desperately
sentiment can change so swiftly, why true keen to be part of the group."
contrarians are so hard to find and why
investors care so much about the "When someone influences you, it
"consensus view" on Wall Street. happens very quickly, in under a second,"
7
8. says the lead researcher, Daniel Campbell-
Meiklejohn of Aarhus University. "That How to Pick Better Mutual
mechanism can travel quite quickly
through a population." Funds?
The experiment also showed that learning
that the experts agree with one another—
regardless of whether you agree with
them—triggers activity in the insula, a
brain region associated with pain and See the entire Newsletter at:
heightened body awareness. This suggests Newsletter, October 2011
that the agreement of others may have a
special ability to grab our mental
attention. No wonder a consensus
opinion is almost impossible for many PEOPLE + PROCESS +
investors to ignore. PHILOSOPHY = PERFORMANCE
Benjamin Graham, the founder of value
investing, wrote that "the market is not a
weighing machine, on which the value of At BFM, we are very analytical and we
each issue is recorded by an exact and believe that asset allocation is more
impersonal mechanism, in accordance important than stocks or mutual fund
with its specific qualities." Rather, he selection…but many of you have asked us to
added, "the market is a voting machine, share our disciplined due diligence
whereon countless individuals register process to selecting investment managers
choices which are the product partly of and mutual funds.
reason and partly of emotion." Herding,
Graham understood, is part of the human You should not be over confident in
condition. pursuing activities beyond your
expertise. For example, practicing skydiving
Thus, if you buy individual stocks, you without a professional skydiver or dancing
should note which way the herd is Ballet without a ballerina’s guidance can
moving—and go the other way. You harm your body. Investing your wealth, just
should get interested in a stock when its like skydiving and ballet dancing, is science
price gets trampled flat by investors but also an art. Investing without
stampeding out of it. The list of new 52- knowledge is like jumping into a valley
week lows is a rough guide to what the without a parachute.
voting machine has been trashing lately.
Then run your own weighing machine,
studying the company's financial Selecting a good mutual fund is extremely
statements, products and competitors to difficult. Only 20% of funds may
determine the value of its business—while outperform their benchmark over the long
ignoring the current price of its stock. And run. 40% of funds that were in business 10
make a permanent record that thoroughly years ago are now gone. A fund can be at
details your rationale for making the the top one period and be at the bottom the
investment. That way, you set in stone next one.
exactly where you stood before the herd
began trying to sweep you away. (Source: As you can see, mutual fund returns can be
WSJ-06/21/10 very different. Thus, effective organized
financial planning is important.
8
9.
The debate between active and passive Short-term greed and impatience will lead
management (investing in index, passive investors to fail. Before investing you should
funds and ETFs) is a constant discussion develop confidence in the fund and the
among individuals in the financial world. patience required for long-term success.
There are qualitative and quantitative factors Otherwise, you should invest in index and
that need to be understood and analyzed passive funds (low costs).
correctly before picking a good fund.
You should decide to be Human emotions are the
either patient with active “Do not wish for quick biggest obstacle to investor
managers or seek a results, nor look for success. Proper research goes
passively managed small advantages. If you well beyond the numbers. It also
approach. The vast majority requires regular meetings or calls
seek quick results, you with the managers. Natural
of long-term top will not attain the
performing managers will human behavioral tendencies
endure periods of lousy
ultimate goal.” during the manager selection
performance. and termination process
Confucius. generally leads to failure so we
· 85 percent of all ten- recommend a rigorous process.
year top quartile funds spent
We believe that qualitative
at least one three-year stretch metrics for selecting mutual
in the bottom half of their peer group (they funds are as important as quantitative
spent about 23 percent of all their three-year metrics.
periods in the bottom half of their peer
groups).
· 62 percent of ten-year top quartile
funds spent at least one five-year stretch in
the bottom half (19 percent of rolling five-
year periods in the bottom half of their peer
groups). Source DiMeo.
9
10.
What traits and factors do we look for, Quantitative factors:
review carefully, and monitor constantly?
1. Fees/ Expense ratio: Funds in the
Qualitative factors: cheapest quintile were more than twice as
likely to beat the average for their categories
1. People: education, qualifications, than the most expensive quintile
experience, depth, stability, diversity, quality
and diligence of the investment team 2. Tenure / Experience / Track Record of
(portfolio managers, analysts, traders, the Portfolio Managers and Analysts. The
auditors…) average tenure maybe close to 6 years
only…
2. Investment philosophy that is
consistent, clearly articulated and 3. Fund ownership** by the portfolio
understandable management team
3. Investment process and style based on 4. 5 and 10-year Information Ratio (IR)
meritocracy that are transparent, repeatable, and peer ranking. The IR measures the risk-
consistent, and definable with good buy and adjusted return for assessing the
sell discipline and risk management performance of active portfolio managers
procedures
5. Long-term after tax
4. Stewardship: a corporate culture of return/performance: GMO Emerging
excellence, with clean regulatory history, Country Debt had a 10-year annual return
board integrity, independence, ownership was 14.54% ($10,000 became $38,880) but
and compensation who will put your after tax, the post-tax return was 9.80%
interests first ($10,000 became $25,468 or 35% less)
5. Firm ownership structure 6. Consistency of portfolio returns with the
investment process (attribution reports)
6. Manager compensation and incentives
structure (salary, bonus, stocks, shares…) 7. Funds concentration
that reward individual contributions
8. Tracking Error and Active Share: these
7. High conviction approach that is distinct numbers represent how much the fund
and with potential to outperform. returns deviate from the benchmark
8. What percentage of research is generated 9. Beta and Correlation with the fund’s
internally (vs. sell-side research from Wall true Benchmark (R square)
Street)?
10. Inflows/Outflows and total assets in the
Such data may not available by directly fund today and 5 years ago
looking into sources like Bloomberg and
Morningstar. This requires contacting every 11. Up/Down capture ratio and maximum
fund and requesting them to provide the drawdown
data.
We also review the portfolio composition, 12. Sortino Ratio which measures the risk-
size (small or large cap) and style of the adjusted return
funds, manager concentration, and if a
manager has closed a fund to new investors 13. Volatility
in the past and ask how they decide to close 14. Turnover which measures the number
it in the future. of times securities/shares are
replaced/traded
10
11. Performance May Lower your Returns
1. Dalbar Research Institute shows that investor’s performance does not equal investment
performance. They found the following annualized returns for investors from 1987 to 2006
(similar results are found for different time period):
-The average equity-fund investor realized an annualized return of 4.30% ($100,000
became $222,536).
-The market timer equity fund investor realized an annualized return of -1.80% ($100,000
became $70,814).
-The market (S&P 500) realized an annualized return of 11.80% ($100,000 became
$832,519).
2. Using another research report from Lipper and DALBAR, we can see, in the chart below,
that chasing performance may lower your returns. This research shows how mutual fund
investors’ behavior affects the returns they actually earn.
Source:
Lipper and
DALBAR
11
12. your stone age brain may be good with
physical risk, but it is the same one that
Let's Put Things in governs your investment gut - it is not a
Perspective good investment manager.
As you know, we take a long-term, academic
and disciplined approach to investing and
We decided this time to send you some we try not to react emotionally to market
charts to help you put things in perspective swings, unlike many individual investors
since the U.S. stock market went down 8% who tend to sell equities and lock in losses
in July and August. Note that the market is during down-turns. The portfolios we
still up 5% in the last 12 months and up recommend are always customized and well-
70% since March 2009. diversified. Markets volatility and declines
give opportunity to rebalance the portfolios.
The charts attached may help you draw your
own conclusions without being manipulated
by the media, friends…
See the entire Newsletter at:
In Summary: Newsletter, September 2011
· This summer’s stock decline was
nothing exceptional
· The economy doesn’t look that bad
· Stocks are not expensive
Details
· Stocks perform well over the long-
term, sometimes right after a major
correction and/or spike in volatility •U.S. Stocks have been going up in the long
run and outperformed bonds most of the
time over any 5-year periods
We still think that the chance of another
recession may be 20% - 50% before 2014 •Historically stock market declines have
but the charts should help you to put in been much worse: down 86% in 1929-32,
perspective what happened this summer. 49% in 2001, 57% in 2007-09…
A huge part of successful investing is
just avoiding common errors like •Other asset classes have seen much worse
panicking. The goal is not to be error-free; decline:
it is to be right more than wrong over time. -Long U.S. Treasury Bond real return was
Humans are intuitive creatures, but markets negative 67% between 1941 and 1981.
are inherently counterintuitive. Investing, -Gold was down 62% between 1980 and
like medicine and many fields of science, 1986
is a probabilities game, not a certainties -Japan Stocks were down 82% between 1990
game. Investing requires faith that
and 2009
Capitalism is not perfect in the near term -Most declines have been followed by 5
but eventually gets very close longer term. years of gains
Sometimes, doing nothing is the best •Nearly every significant up year for the
strategy... and it is not easy... When you are markets had also a significant intra-year
tempted to go with your gut, remember that decline
12
13. •When the volatility is high, markets often •When consumer sentiment bottoms, the
rise following 12 months tend to be good for
•U.S. Companies are in much better shape stocks. Extreme pessimism in consumer
(profits, cash holdings, dividend payouts) confidence may be a bullish sign for the
than in 2000 market
•The Yield curve is usually flat before •Moderate GDP Growth (2%-3%) has not
recessions. It is far from flat now been bad for stocks historically. But can we
keep a 2%+ growth?
•DIVERSIFICATION WORKS!
U.S. Stock Market History, 1871 – April 2011
Initial Job Claims Is Down: Usually, it is Up Before
Recession – (Recessions are in grey)
13
14. Stocks Outperformed Bonds Most of 5-Year Periods
Historical Markets Declines: We Have Seen Much
Historical Markets Declines: We Have Seen Much
Please find
the first
BFM Video:
Video
You will find
investment
strategies to
help you
reach
financial
security,
grow your
assets and
achieve a
comfortable
retirement.
14
15. Apendix
4. Think about Estate Planning: Look
Year-End Financial into how various trusts, such as a bypass
Planning Tips trust or grantor retained annuity trust, might
help you reduce your estate tax liability.
2010 YEAR-END FINANCIAL
PLANNING : What you should have done !
5. Accelerate or Defer deductions: Have
With the end of the year approaching, here your tax advisor determine now if you have
are some important tax and financial any Alternative Minimum Tax (AMT)
planning measure you can take to reduce liability for 2010. If so, you may consider
your taxes and improve your financial deferring taxable income to 2011 or
position. accelerating or deferring deductions in 2010
to minimize AMT.
1. Sell some stocks, bonds, or mutual
funds before the increase in capital and 6. Spend all your money in your FSA: Use
income tax rates: Look at carryovers of any balance in your employer’s Flexible
past tax losses and whether any potential Spending Account (FSA) for qualified
losses on depreciated securities would be medical expenses by year-end 2010. When
more valuable in 2010 or in future years. If estimating your contributions for next year,
you end up with a loss, either short or long consider the increasing costs of uncovered
term, $3,000 of that loss can be used to medical expenses and changes in your
offset ordinary income. A $3,000 loss will company’s medical insurance plan.
save you approximately $840 in taxes,
assuming you are in the 28% bracket. Short- 7. Take your Required Minimum
term capital gains (one year holding or less) Distribution (RMD) once you turn 70.5
are taxed at ordinary income tax rates up to years old (or you can be subject to a 50% tax
35% in 2010. Long-term capital gains (more penalty!)
than one year holding) are taxed at 15%, for
taxpayers in the 25% tax brackets or above.
Tax rates should increase in 2011.
8. Fund your 529 higher education savings
2. Contribute to your IRA and other plan ($13,000 per person, per beneficiary).
company retirement accounts: IRA - 401
(k) - 403 (b) accounts provide tax-deferred
9. Other Deductions: In 2010, did you buy
growth. Since January 2010, high-income
a new car or first house, upgrade your
investors also have the opportunity to
existing home to be more energy efficient,
convert assets from a Traditional IRA or
or pay for a dependent’s higher education
employer-sponsored retirement plan to a
expenses? You may meet the requirements
Roth IRA. A Roth IRA offers tax-free
for claiming a tax credit or deduction. You
income in retirement.
could also pay your property taxes by year
end if you are a home owner.
3. Make Donations: In 2010 you can gift
up to $13,000 ($26,000 for a married couple)
free of gift tax.
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