Sound Investing In Global Financial Crisis - 6th Dec 2008Peter Lim
The document provides lessons on sound investing based on the author Peter Lim's experience. It discusses that (1) investors should prepare by living below their means and setting aside emergency funds before investing; (2) common stocks have historically provided the highest returns over the long term though with more risk; and (3) diversification and investing for the long run through index funds reduces risk while maintaining returns for most investors.
This document discusses overcoming obstacles to thriving in business and life. It encourages the reader to adapt, learn, strategize effectively and take new approaches rather than making excuses. The keys to freedom and success are listed as systems thinking from a new paradigm, passion, purpose and taking the first step by assessing where you are and where you want to go. The overall message is that now is the time to thrive by doing things differently rather than waiting.
Why Average Investors Earn Below Average Market Returns?Peter Lim
Investor behavior causes average investors to earn below-average market returns. Studies show investors tend to buy high and sell low by pouring money into mutual funds when the market rises and pulling it out when it falls. This causes their returns to be substantially less than the actual market returns of around 12% annually. Investors overreact to good and bad news due to emotional decision-making. However, taking a disciplined, long-term approach by ignoring emotions and not reacting to short-term market changes can help investors achieve higher returns over the long run.
Personal Finance: Introduction to Behavioral Finance by @PhroogalJason Vitug
Behavioral finance is a subcategory of finance that seeks to explain the rationality or irrationality of financial decision-making. It seeks to combine behavioral and cognitive psychology theory with finance to provide explanations for why people make irrational decisions.
This document discusses various cognitive biases and tendencies that can influence human decision-making and behavior in irrational ways. It describes biases like social proof bias, availability bias, contrast effect, mere association bias, sunk cost fallacy, loss aversion, priming tendency, twaddle tendency, mental accounting, incentive tendency, punishment tendency, first conclusion tendency, and provides strategies to overcome each one. It emphasizes the importance of developing a latticework of mental models from different disciplines to make better decisions by considering multiple perspectives rather than relying on a single model or perspective.
Barry Ritholtz Presentation on Behavioral Economics (CFA Toronto 2013)Chand Sooran
A good introduction to key issues in behavioral economics from Barry Ritholtz in a presentation made to the CFA Toronto Group. Pithy, entertaining and informative.
Behavioral Finance key notes for non financial managers. This help also the financial advisors discover the type of behavioral finance biases among their clients.
It also highlight the types of financial risks, and types of clients according to their risk capacity and risk tolerance.
It also add value to investors specially in the investment decision making process.
The document outlines 7 common mistakes that investors make: 1) Not having an investment plan, 2) Having too short of a time horizon, 3) Paying too much attention to financial media, 4) Not rebalancing a portfolio, 5) Having overconfidence in managers' abilities, 6) Not enough indexing of investments, and 7) Chasing past performance. The solutions proposed are to have an investment plan, focus on long-term goals rather than short-term fluctuations, ignore most financial news, regularly rebalance a portfolio, recognize that most managers underperform, index most investments, and stick to a plan rather than chasing trends.
Sound Investing In Global Financial Crisis - 6th Dec 2008Peter Lim
The document provides lessons on sound investing based on the author Peter Lim's experience. It discusses that (1) investors should prepare by living below their means and setting aside emergency funds before investing; (2) common stocks have historically provided the highest returns over the long term though with more risk; and (3) diversification and investing for the long run through index funds reduces risk while maintaining returns for most investors.
This document discusses overcoming obstacles to thriving in business and life. It encourages the reader to adapt, learn, strategize effectively and take new approaches rather than making excuses. The keys to freedom and success are listed as systems thinking from a new paradigm, passion, purpose and taking the first step by assessing where you are and where you want to go. The overall message is that now is the time to thrive by doing things differently rather than waiting.
Why Average Investors Earn Below Average Market Returns?Peter Lim
Investor behavior causes average investors to earn below-average market returns. Studies show investors tend to buy high and sell low by pouring money into mutual funds when the market rises and pulling it out when it falls. This causes their returns to be substantially less than the actual market returns of around 12% annually. Investors overreact to good and bad news due to emotional decision-making. However, taking a disciplined, long-term approach by ignoring emotions and not reacting to short-term market changes can help investors achieve higher returns over the long run.
Personal Finance: Introduction to Behavioral Finance by @PhroogalJason Vitug
Behavioral finance is a subcategory of finance that seeks to explain the rationality or irrationality of financial decision-making. It seeks to combine behavioral and cognitive psychology theory with finance to provide explanations for why people make irrational decisions.
This document discusses various cognitive biases and tendencies that can influence human decision-making and behavior in irrational ways. It describes biases like social proof bias, availability bias, contrast effect, mere association bias, sunk cost fallacy, loss aversion, priming tendency, twaddle tendency, mental accounting, incentive tendency, punishment tendency, first conclusion tendency, and provides strategies to overcome each one. It emphasizes the importance of developing a latticework of mental models from different disciplines to make better decisions by considering multiple perspectives rather than relying on a single model or perspective.
Barry Ritholtz Presentation on Behavioral Economics (CFA Toronto 2013)Chand Sooran
A good introduction to key issues in behavioral economics from Barry Ritholtz in a presentation made to the CFA Toronto Group. Pithy, entertaining and informative.
Behavioral Finance key notes for non financial managers. This help also the financial advisors discover the type of behavioral finance biases among their clients.
It also highlight the types of financial risks, and types of clients according to their risk capacity and risk tolerance.
It also add value to investors specially in the investment decision making process.
The document outlines 7 common mistakes that investors make: 1) Not having an investment plan, 2) Having too short of a time horizon, 3) Paying too much attention to financial media, 4) Not rebalancing a portfolio, 5) Having overconfidence in managers' abilities, 6) Not enough indexing of investments, and 7) Chasing past performance. The solutions proposed are to have an investment plan, focus on long-term goals rather than short-term fluctuations, ignore most financial news, regularly rebalance a portfolio, recognize that most managers underperform, index most investments, and stick to a plan rather than chasing trends.
The RBNZ has just introduced new rules stating property investors need to have a 40% deposit. Let's look at what this means, what the likely reaction is going to be and some strategies you can use to keep investing.
This document summarizes key concepts in behavioral finance, which models how psychological factors influence investor behavior. It discusses two categories of irrationalities: errors in information processing and behavioral biases. Specific errors discussed include forecast errors due to overreacting to recent data, overconfidence, conservatism in updating beliefs, and neglecting sample size. Biases discussed include reference dependence, regret avoidance, house money effect, and mental accounting.
Behavioral Finance for Financial PlannersRussell James
A review of several behavioral economics / behavioral finance concepts and examples of how to apply the dual-self economic model to advising clients in a financial planning context.
Taking on Wall Street: A Comparative Study of Strategies Sourced from "The Pr...Quantopian
A unique set of data comprised of strategy returns sourced through traditional means from managers (“the pros”) and from strategies developed on Quantopian’s platform (“the crowd”) is analyzed. We detect distinct groups of strategy styles within the data: In particular, some "crowd" strategies fall into their own clusters distinct from those within the "pro" data set. A few do overlap as well. We go on to analyze the various strategy groups with respect to environmental conditions and risk factors (among other relevant features), teasing out differences in trading styles.
Ultimately we judge how well “the crowd” is doing so far, in terms of being able to compete with the established managers not only in terms of performance but also with respect to risk management and overall novelty and diversification in the trading styles that have emerged. Finally we address general notions (and pitfalls) of building meta strategies from manager return streams.
This presentation was part of QuantCon 2015 hosted by Quantopian. Visit us at: www.quantopian.com.
Contained within this guide are 13 essential rules for profitable investing. Each rule is easy-to-implement and will bring about a measurable increase in your long-term returns. Check it out now!
Behavioral finance proposes that psychology affects investment decisions. The field began in 1979 with prospect theory, which found that people value gains and losses differently and losses have a greater emotional impact. Endowment bias describes valuing something you own more than something you don't. Studies show people value owned items more than similar unowned items. This bias causes investors to hold onto inherited or purchased securities due to fears of loss, decision paralysis, wanting to avoid transaction costs, and preference for familiar investments, even if they are performing poorly.
Behavioral finance acknowledges that investors are not perfectly rational and takes into account psychological factors that influence behavior. Some common behavioral quirks exhibited by investors include overconfidence, loss aversion, anchoring, regret, and herding behavior. While laboratory experiments show evidence of these quirks, questions remain about whether they apply outside the lab and how they aggregate in financial markets. Herding behavior, where investors follow the actions of others, can potentially explain bubbles when many investors exhibit the same behavioral biases.
Stevens-Henager College - Personal growth seminar / "Reaching your Dreams"Stevens-Henager College
Stevens-Henager College held a free seminar on Wednesday, February 2, 2011 titled Personal growth seminar / "Reaching your Dreams".
• It's time to strengthen your resolve
• It's time to be realistic
• It's time to find support
• It's time to really learn how
Video from the seminar is also available on our YouTube channel at: http://www.youtube.com/stevenshenaer
I'm looking for 2 people that want to change their current situation.
See how $18, one time, can change your situation in one year. There is strength in numbers. Teamwork makes the dream work. Take a look here >>> http://tinyurl.com/kb7luuf
http://Kaea80.4c4all.com
http://flow77.4c4all.com
http://unitedlove1.4c4all.com
Mental accounting refers to how people separate and evaluate their money mentally based on subjective factors like the source of funds, intended use, and whether gains or losses are being realized. People do not always treat money as fungible or interchangeable due to mental accounting biases. For example, people are more willing to spend windfall gains like bonuses on unnecessary purchases rather than important expenses. They also take more risks with investment accounts than savings earmarked for emergencies. To avoid suboptimal financial decisions due to mental accounting biases, people should treat all funds interchangeably, have a coherent investment strategy, and avoid overspending leftover budgets.
This document provides advice for beginner investors on avoiding common mistakes when starting to invest in the stock market. It recommends:
1) Doing in-depth research to understand a company's finances, competitors, and position before investing. This includes comparing metrics like earnings and market capitalization between competitors.
2) Using demo accounts to practice investing with fake money before using real funds.
3) Controlling emotions by having an investment plan with targets for gains, maximum losses, and sticking to the plan.
This document provides summaries of Warren Buffett's advice on investing based on excerpts from Berkshire Hathaway annual letters and other sources. It advises investing in low-cost index funds rather than trying to pick stocks or time the market. Buffett believes investors should ignore forecasts, have discipline by sticking to their investment plan, and not overreact to short-term market movements. The document suggests developing a written investment plan and controlling emotions to invest successfully like Buffett advocates.
Presentation will give you simple tips on how to make right financial decision. Very small but disciplined investment over long time can make fortunes.
This document provides a brief introduction to behavioral finance through three main points:
1. Behavioral finance drops the traditional assumptions of rational investors and efficient markets. It incorporates insights from cognitive psychology on how people think irrationally and the limits of arbitrage in markets.
2. Cognitive biases that influence investors include overconfidence, mental accounting, framing effects, representativeness, conservatism, and the disposition effect. These can lead investors to make suboptimal decisions.
3. When arbitrage is difficult due to constraints like short-selling bans, mispricings may not be corrected and markets can become inefficient. This helps explain bubbles like those seen in Japan and tech stocks in the late 1990s
The document discusses developing a personal investment philosophy by identifying one's true purpose for money, market beliefs, and investment strategy. It explains that having a clear investment philosophy based on understanding these principles can help alleviate common investor dilemmas and provide better financial outcomes through a structured, long-term approach. Developing an investment philosophy is presented as key to achieving financial goals with peace of mind.
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.
The RBNZ has just introduced new rules stating property investors need to have a 40% deposit. Let's look at what this means, what the likely reaction is going to be and some strategies you can use to keep investing.
This document summarizes key concepts in behavioral finance, which models how psychological factors influence investor behavior. It discusses two categories of irrationalities: errors in information processing and behavioral biases. Specific errors discussed include forecast errors due to overreacting to recent data, overconfidence, conservatism in updating beliefs, and neglecting sample size. Biases discussed include reference dependence, regret avoidance, house money effect, and mental accounting.
Behavioral Finance for Financial PlannersRussell James
A review of several behavioral economics / behavioral finance concepts and examples of how to apply the dual-self economic model to advising clients in a financial planning context.
Taking on Wall Street: A Comparative Study of Strategies Sourced from "The Pr...Quantopian
A unique set of data comprised of strategy returns sourced through traditional means from managers (“the pros”) and from strategies developed on Quantopian’s platform (“the crowd”) is analyzed. We detect distinct groups of strategy styles within the data: In particular, some "crowd" strategies fall into their own clusters distinct from those within the "pro" data set. A few do overlap as well. We go on to analyze the various strategy groups with respect to environmental conditions and risk factors (among other relevant features), teasing out differences in trading styles.
Ultimately we judge how well “the crowd” is doing so far, in terms of being able to compete with the established managers not only in terms of performance but also with respect to risk management and overall novelty and diversification in the trading styles that have emerged. Finally we address general notions (and pitfalls) of building meta strategies from manager return streams.
This presentation was part of QuantCon 2015 hosted by Quantopian. Visit us at: www.quantopian.com.
Contained within this guide are 13 essential rules for profitable investing. Each rule is easy-to-implement and will bring about a measurable increase in your long-term returns. Check it out now!
Behavioral finance proposes that psychology affects investment decisions. The field began in 1979 with prospect theory, which found that people value gains and losses differently and losses have a greater emotional impact. Endowment bias describes valuing something you own more than something you don't. Studies show people value owned items more than similar unowned items. This bias causes investors to hold onto inherited or purchased securities due to fears of loss, decision paralysis, wanting to avoid transaction costs, and preference for familiar investments, even if they are performing poorly.
Behavioral finance acknowledges that investors are not perfectly rational and takes into account psychological factors that influence behavior. Some common behavioral quirks exhibited by investors include overconfidence, loss aversion, anchoring, regret, and herding behavior. While laboratory experiments show evidence of these quirks, questions remain about whether they apply outside the lab and how they aggregate in financial markets. Herding behavior, where investors follow the actions of others, can potentially explain bubbles when many investors exhibit the same behavioral biases.
Stevens-Henager College - Personal growth seminar / "Reaching your Dreams"Stevens-Henager College
Stevens-Henager College held a free seminar on Wednesday, February 2, 2011 titled Personal growth seminar / "Reaching your Dreams".
• It's time to strengthen your resolve
• It's time to be realistic
• It's time to find support
• It's time to really learn how
Video from the seminar is also available on our YouTube channel at: http://www.youtube.com/stevenshenaer
I'm looking for 2 people that want to change their current situation.
See how $18, one time, can change your situation in one year. There is strength in numbers. Teamwork makes the dream work. Take a look here >>> http://tinyurl.com/kb7luuf
http://Kaea80.4c4all.com
http://flow77.4c4all.com
http://unitedlove1.4c4all.com
Mental accounting refers to how people separate and evaluate their money mentally based on subjective factors like the source of funds, intended use, and whether gains or losses are being realized. People do not always treat money as fungible or interchangeable due to mental accounting biases. For example, people are more willing to spend windfall gains like bonuses on unnecessary purchases rather than important expenses. They also take more risks with investment accounts than savings earmarked for emergencies. To avoid suboptimal financial decisions due to mental accounting biases, people should treat all funds interchangeably, have a coherent investment strategy, and avoid overspending leftover budgets.
This document provides advice for beginner investors on avoiding common mistakes when starting to invest in the stock market. It recommends:
1) Doing in-depth research to understand a company's finances, competitors, and position before investing. This includes comparing metrics like earnings and market capitalization between competitors.
2) Using demo accounts to practice investing with fake money before using real funds.
3) Controlling emotions by having an investment plan with targets for gains, maximum losses, and sticking to the plan.
This document provides summaries of Warren Buffett's advice on investing based on excerpts from Berkshire Hathaway annual letters and other sources. It advises investing in low-cost index funds rather than trying to pick stocks or time the market. Buffett believes investors should ignore forecasts, have discipline by sticking to their investment plan, and not overreact to short-term market movements. The document suggests developing a written investment plan and controlling emotions to invest successfully like Buffett advocates.
Presentation will give you simple tips on how to make right financial decision. Very small but disciplined investment over long time can make fortunes.
This document provides a brief introduction to behavioral finance through three main points:
1. Behavioral finance drops the traditional assumptions of rational investors and efficient markets. It incorporates insights from cognitive psychology on how people think irrationally and the limits of arbitrage in markets.
2. Cognitive biases that influence investors include overconfidence, mental accounting, framing effects, representativeness, conservatism, and the disposition effect. These can lead investors to make suboptimal decisions.
3. When arbitrage is difficult due to constraints like short-selling bans, mispricings may not be corrected and markets can become inefficient. This helps explain bubbles like those seen in Japan and tech stocks in the late 1990s
The document discusses developing a personal investment philosophy by identifying one's true purpose for money, market beliefs, and investment strategy. It explains that having a clear investment philosophy based on understanding these principles can help alleviate common investor dilemmas and provide better financial outcomes through a structured, long-term approach. Developing an investment philosophy is presented as key to achieving financial goals with peace of mind.
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.
S.M.A.R.T.E.R. - Specific Measurable, Attainable, Realistic, Time-Bound, Exciting and Rewarding these the components of #LIFEGOALS. Life Goals are easier to rationalize than the stock market. So Why do we still dwell on managing our investment as a professional fund manager rather than a real investor? This presentation looks at the wisdom of Peter Lynch about why we will fail at forecasting and how what Benjamin Graham will have to say about our personal investment approach.
I also included some tips on how we can build wealth over time by simply investing our money where it belongs.
Understanding how the mind can help or hinder investment successRavi Abeysuriya
This document provides an overview of behavioral finance and how psychological biases can influence investment decisions. Some key points:
- Behavioral finance studies how emotions and psychological biases can cause investors to make irrational financial decisions. Understanding these biases can help advisers improve their recommendations and clients' investment outcomes.
- Traditional finance assumes investors are rational, while behavioral finance recognizes that normal human investors are not perfectly rational and can be swayed by emotions and cognitive biases.
- Common biases that can negatively impact investing include overconfidence, herd mentality, loss aversion, anchoring, and narrow framing.
- By understanding these biases, advisers can help clients avoid common pitfalls and make more informed financial decisions. Techniques like
Capital biasReducing human error in capital decision-makingTawnaDelatorrejs
Capital bias
Reducing human error in capital decision-making
A report by the
Center for Integrated Research
Deloitte’s Capital Efficiency practice helps organizations make better and faster decisions by
assisting them in improving the quality of their capital allocation decisions to enhance robustness,
efficiency, and return on investment.
Capital bias
The balancing act | 2
Choreographing the optimism bias, expert bias,
and narrow framing | 3
Mitigating biases in planning: The US Navy | 7
Prioritization: Leveling the playing field | 9
Stripping away your own organization’s biases | 11
Endnotes | 12
CONTENTS
Reducing human error in capital decision-making
1
A look at the S&P 500 suggests just how dif-ficult it can be to consistently drive positive results. Take one measure, return on in-
vested capital (ROIC). In a Deloitte study, neither
the amount of capital expenditures (as a percentage
of revenue) nor the growth in capital expenditure
demonstrated any kind of meaningful correlation
with ROIC.1 Regardless of industry, individual com-
panies can often have a difficult time maintaining
high and steady returns on their investments year
over year.
Given such uncertainty in capital allocation re-
sults, it may not be surprising that more than 60
percent of finance executives say they are not con-
fident in their organization’s ability to optimally al-
locate capital.2 After all, many companies are bal-
ancing competing priorities, diverse stakeholder
interests, and a complex variety of proposals that
can make capital allocation decisions even more dif-
ficult to execute in practice.
Why is this? On paper it seems practical enough
for everyone throughout the organization to be on
the same page. In an ideal world, a company estab-
lishes the goals and priorities; then, from senior
managers to frontline employees, everyone is ex-
pected to act in a manner that supports these man-
dates.
However, behavioral science, and possibly your
own experience, suggest it’s likely not always that
simple. Individuals at any level of an organization
may be overly optimistic about certain courses of
action, rely too much on specific pieces of informa-
tion (and people), or simply interpret the objective
through too narrow a lens (that may even run coun-
ter to other views on how to achieve these goals).
Within the behavioral science field, these are
referred to as cognitive biases and they exist in
many endeavors, not just capital planning. These
same biases can explain why we are too optimistic
about our retirement portfolios, can rely solely on
the opinions of experts in matters of health, and
narrowly frame our car buying decisions based on
a single attribute, such as fuel efficiency—ignoring
safety features, price, and aesthetic design. In the
language of the behavioral sciences, these translate
into the optimism bias, expert bias, and narrow
framing, respectively.
Though these biases, an ...
Capital bias reducing human error in capital decision makingsodhi3
The US Navy improved its capital planning process to reduce biases by setting aggressive energy goals to source 50% of energy from alternatives by 2020. When field managers developed capital requests, the Navy Installations Command organized the process to align spending with these energy goals. Specifically, it established a scoring framework linking requests to specific, observable metrics related to the goals, providing consistency and minimizing biases compared to past practices that relied on tiers lacking specificity. This helped achieve a broader view aligning all requests with the Navy's requirements.
This document provides a summary of ways people unintentionally mess up their financial lives through the choices and decisions they make. It gives examples such as buying poor investment products, not purchasing adequate insurance, not creating a will, overspending, and not hiring a financial planner. While people may think these are active decisions, they are actually passively choosing outcomes like financial struggle, debt, stress for loved ones, and wasted money by not taking recommended actions. The document encourages people to recognize the implicit choices behind their inactions in financial planning.
Capturing Alpha - An New Approach to Crowdsourcing Investment WisdomThomas Beevers
Thomas Beevers, the cofounder and CEO of StockViews, gave a presentation to Columbia Financial Investment Group about capturing alpha. He discussed his background in finance, refuted the efficient market hypothesis, and outlined characteristics of top investors like emotional discipline and independent thinking. Beevers believes markets are inefficient due to human nature, and that investors with the right framework can consistently outperform by taking advantage of other investors' behavioral biases. StockViews aims to isolate the signals of alpha generators from the crowd using a crowdsourcing model, high-quality research interface, and mentorship program.
This document summarizes key points from a book on the psychology of money. It discusses several topics:
1) No one's financial decisions are truly "crazy" - they are shaped by experiences like inflation during one's teenage years.
2) Both luck and risk play large roles in financial success, but our brains prefer simple explanations. We cannot perfectly separate a "lucky break" from a truly skilled decision.
3) The power of compounding returns can be confounding. Even small returns over long periods can result in large gains, but it is hard for people to appreciate this and resist the urge to chase returns.
4) Maintaining wealth requires humility, frugality and accepting luck
This document provides a summary of Jack Welch's career and leadership philosophy as outlined in his book. It discusses how Welch rose through the ranks at GE from a junior engineer to ultimately becoming CEO. Key parts of his approach included establishing a clear mission and values, promoting candor, evaluating and developing talent, driving change and innovation. The summary highlights Welch's emphasis on leadership, hiring the right people, managing performance, and embracing strategies like Six Sigma to drive growth and competitive advantage.
This document discusses the process of learning about clients in order to develop an effective investment policy and strategy. It outlines how investment advisors gather information through client interviews and questionnaires to understand a client's personal situation, financial situation, goals, and risk tolerance. Advisors need to be aware that clients may have difficulty expressing themselves or their true risk tolerance. Questionnaires provide standardized information but have limitations. Overall the process aims to develop a holistic understanding of the client to inform the investment policy statement and ensure their portfolio meets their needs and risk profile.
The article provides an overview of the current Indian stock market in terms of key indices, valuations, and potential returns. It shows charts tracking the movement of the Nifty 50 over the past decade and rolling 10-year returns to analyze the relative performance at different times. Valuation metrics like the price-to-earnings ratio of the Sensex, the ratio of total market capitalization to GDP, and the price-to-book ratio are presented to assess if the market is overvalued, undervalued or fairly priced currently based on historical benchmarks. The dividend yield is also presented as another indicator of valuation and return potential.
Important Lessons For Successful Investing.StockAxis
"Important Lessons for Successful Investing" is provided by StockAxis, one of the best investment advisory firms in India. This presentation contains information and tips on successful investing, including the importance of having a long-term investment strategy, understanding market cycles, diversification, risk management, and the significance of choosing high-quality companies for investment. The document also provides insights into some common mistakes made by investors and how to avoid them. Overall, this presentation serves as a useful guide for individuals who are interested in investing or seeking to enhance their investment knowledge.
Know More about our services:https://stockaxis.com/LP/Multibagger/OptionC/Index.aspx?source_google=ads&source_medium=searchsales&source_campaignid=04022023&source_campaignname=SSLPC
I express my sincere respect to the authors and my teachers from whom I remain updated in this segment. Due care have been taken so as not to violate the copyright issues.
What are the Typical Challenges Faced by Potential Investors?DEEP GAJBE
Personal Finance awareness is spreading rapidly across India which is a good thing. But there are still some Challenges faced by investors which you can tackle after reading this E-book.
Download Full Free E-Book to Learn More.
Investing Public Funds: PFI Strategies is in the business of “finding money” in an institution’s operational and reserve funds. We also help public fund investors avoid the heartache of poor investment decisions, which everyone makes from time to time
This document provides an introduction to investing and discusses several key concepts:
1) It is impossible to consistently predict when markets will rise and fall, so the best strategy is to invest regularly over time through ups and downs to benefit from pound cost averaging.
2) While it is difficult to determine if markets are cheap or expensive, standard valuation metrics like the price-to-earnings ratio can provide some guidance.
3) All investments carry risk, and higher potential returns generally require taking on more risk. It is important to understand the risks and reduce risk exposure when markets are highly valued.
Similar to Successful investing - over optimism (20)
LWM Consultants provides financial planning and investment management services with the objectives of maximizing returns while minimizing risk of loss. They employ a rigorous selection process to identify high-quality funds and asset managers and construct diversified portfolios. Key aspects of their investment philosophy and process include long-term holding periods, rebalancing annually to control risk, and ongoing monitoring of existing and potential assets. As of 2019, they managed over £127 million in assets across portfolios with varying risk profiles.
Introducing our series on how not to be your own worst enemy. We will build up a bank of presentations over the coming months.
A presentation on its own means nothing. Our aim and desire is to go and present our ideas and thoughts for free to schools and colleges in the Bristol and South West area.
"Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception."
Our latest presentation on investing looks at bubbles, why they happen and what to look out for.
“We want to win every game we play at every level and we want to be right on every single player decision we make. We know it’s not going to happen, because there is too much uncertainty…..too much we cannot control. That said we can control the process.”
Read our latest investment presentation.
The biggest bubble that is about to burst considers the bubble is risk aversion. Bonds is taking more money now that has been seen since 2007 however this doesn't reflect the reality of what is happening. Investors are like sheep and need to leave the party.
How to Invest in Cryptocurrency for Beginners: A Complete GuideDaniel
Cryptocurrency is digital money that operates independently of a central authority, utilizing cryptography for security. Unlike traditional currencies issued by governments (fiat currencies), cryptocurrencies are decentralized and typically operate on a technology called blockchain. Each cryptocurrency transaction is recorded on a public ledger, ensuring transparency and security.
Cryptocurrencies can be used for various purposes, including online purchases, investment opportunities, and as a means of transferring value globally without the need for intermediaries like banks.
The Rise and Fall of Ponzi Schemes in America.pptxDiana Rose
Ponzi schemes, a notorious form of financial fraud, have plagued America’s investment landscape for decades. Named after Charles Ponzi, who orchestrated one of the most infamous schemes in the early 20th century, these fraudulent operations promise high returns with little or no risk, only to collapse and leave investors with significant losses. This article explores the nature of Ponzi schemes, notable cases in American history, their impact on victims, and measures to prevent falling prey to such scams.
Understanding Ponzi Schemes
A Ponzi scheme is an investment scam where returns are paid to earlier investors using the capital from newer investors, rather than from legitimate profit earned. The scheme relies on a constant influx of new investments to continue paying the promised returns. Eventually, when the flow of new money slows down or stops, the scheme collapses, leaving the majority of investors with substantial financial losses.
Historical Context: Charles Ponzi and His Legacy
Charles Ponzi is the namesake of this deceptive practice. In the 1920s, Ponzi promised investors in Boston a 50% return within 45 days or 100% return in 90 days through arbitrage of international reply coupons. Initially, he paid returns as promised, not from profits, but from the investments of new participants. When his scheme unraveled, it resulted in losses exceeding $20 million (equivalent to about $270 million today).
Notable American Ponzi Schemes
1. Bernie Madoff: Perhaps the most notorious Ponzi scheme in recent history, Bernie Madoff’s fraud involved $65 billion. Madoff, a well-respected figure in the financial industry, promised steady, high returns through a secretive investment strategy. His scheme lasted for decades before collapsing in 2008, devastating thousands of investors, including individuals, charities, and institutional clients.
2. Allen Stanford: Through his company, Stanford Financial Group, Allen Stanford orchestrated a $7 billion Ponzi scheme, luring investors with fraudulent certificates of deposit issued by his offshore bank. Stanford promised high returns and lavish lifestyle benefits to his investors, which ultimately led to a 110-year prison sentence for the financier in 2012.
3. Tom Petters: In a scheme that lasted more than a decade, Tom Petters ran a $3.65 billion Ponzi scheme, using his company, Petters Group Worldwide. He claimed to buy and sell consumer electronics, but in reality, he used new investments to pay off old debts and fund his extravagant lifestyle. Petters was convicted in 2009 and sentenced to 50 years in prison.
4. Eric Dalius and Saivian: Eric Dalius, a prominent figure behind Saivian, a cashback program promising high returns, is under scrutiny for allegedly orchestrating a Ponzi scheme. Saivian enticed investors with promises of up to 20% cash back on everyday purchases. However, investigations suggest that the returns were paid using new investments rather than legitimate profits. The collapse of Saivian l
Monthly Market Risk Update: June 2024 [SlideShare]Commonwealth
Markets rallied in May, with all three major U.S. equity indices up for the month, said Sam Millette, director of fixed income, in his latest Market Risk Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
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Madhya Pradesh, the "Heart of India," boasts a rich tapestry of culture and heritage, from ancient dynasties to modern developments. Explore its land records, historical landmarks, and vibrant traditions. From agricultural expanses to urban growth, Madhya Pradesh offers a unique blend of the ancient and modern.
“Amidst Tempered Optimism” Main economic trends in May 2024 based on the results of the New Monthly Enterprises Survey, #NRES
On 12 June 2024 the Institute for Economic Research and Policy Consulting (IER) held an online event “Economic Trends from a Business Perspective (May 2024)”.
During the event, the results of the 25-th monthly survey of business executives “Ukrainian Business during the war”, which was conducted in May 2024, were presented.
The field stage of the 25-th wave lasted from May 20 to May 31, 2024. In May, 532 companies were surveyed.
The enterprise managers compared the work results in May 2024 with April, assessed the indicators at the time of the survey (May 2024), and gave forecasts for the next two, three, or six months, depending on the question. In certain issues (where indicated), the work results were compared with the pre-war period (before February 24, 2022).
✅ More survey results in the presentation.
✅ Video presentation: https://youtu.be/4ZvsSKd1MzE
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.
Confirmation of Payee (CoP) is a vital security measure adopted by financial institutions and payment service providers. Its core purpose is to confirm that the recipient’s name matches the information provided by the sender during a banking transaction, ensuring that funds are transferred to the correct payment account.
Confirmation of Payee was built to tackle the increasing numbers of APP Fraud and in the landscape of UK banking, the spectre of APP fraud looms large. In 2022, over £1.2 billion was stolen by fraudsters through authorised and unauthorised fraud, equivalent to more than £2,300 every minute. This statistic emphasises the urgent need for robust security measures like CoP. While over £1.2 billion was stolen through fraud in 2022, there was an eight per cent reduction compared to 2021 which highlights the positive outcomes obtained from the implementation of Confirmation of Payee. The number of fraud cases across the UK also decreased by four per cent to nearly three million cases during the same period; latest statistics from UK Finance.
In essence, Confirmation of Payee plays a pivotal role in digital banking, guaranteeing the flawless execution of banking transactions. It stands as a guardian against fraud and misallocation, demonstrating the commitment of financial institutions to safeguard their clients’ assets. The next time you engage in a banking transaction, remember the invaluable role of CoP in ensuring the security of your financial interests.
For more details, you can visit https://technoxander.com.
Explore the world of investments with an in-depth comparison of the stock market and real estate. Understand their fundamentals, risks, returns, and diversification strategies to make informed financial decisions that align with your goals.
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Dr. Alyce Su Cover Story - China's Investment Leadermsthrill
In World Expo 2010 Shanghai – the most visited Expo in the World History
https://www.britannica.com/event/Expo-Shanghai-2010
China’s official organizer of the Expo, CCPIT (China Council for the Promotion of International Trade https://en.ccpit.org/) has chosen Dr. Alyce Su as the Cover Person with Cover Story, in the Expo’s official magazine distributed throughout the Expo, showcasing China’s New Generation of Leaders to the World.
3. INTRODUCTION
1. Optimism is ingrained in the human psyche
2. Vast majority always look on the bright side of life
4. INTRODUCTION
Consider:
74% of 600 fund managers thought they were above average
70% of analysts think they are better than their peers (of the
same number 91% had recommendations as buys or holds in
February 2008)
80% of students think they will finish in the top 50% of their
class
5. INTRODUCTION
Why?
Tendency to overrate our abilities is amplified by the illusion of control
We believe we can influence the outcome:
30 coin tosses, rigged so everyone would get 50% right
Those who started getting the correct answers first rated themselves better than
those who started off badly
Optimism is not bad, but when we overate our abilities then it becomes hope
6. LET’S SEE HOW WE CAN BEAT OVER-OPTIMISM……
“Optimism may well be a
great life strategy.
However, hope isn’t a good
investment strategy” –
James Montier
7. SELF-SERVICING BIAS
People will:
Act in ways that serve their perceived self invest, i.e. “don’t ask
a barber if you need a hair cut”
Read the things that support their views and talking to those
who support their view
Delete out dissenting voices or opinions
9. OPTIMISM THE RIGHT WAY
On average the 5 year projections of analysts for
their ten best growth stories, did no better over 5
years than their 10 worst stocks
In 4 out of the last 9 years analysts haven’t been able
to predict whether a stock will be up or down
10. OPTIMISM THE RIGHT WAY
On average the 5 year projections of analysts for
their ten best growth stories, did no better over 5
years than their 10 worst stocks
In 4 out of the last 9 years analysts haven’t been able
to predict whether a stock will be up or down
11. OPTIMISM THE RIGHT WAY
Why?
Focus on predication compounder
1) forecast economy 2) forecast interest rates 3) sector performance and 4)
individual stock performance
If you are right 70% of the time (which is high) this means even with variables you will
only be right 24% of the time
Consider the right way……..
12. OPTIMISM THE RIGHT WAY
Ben Graham
Analysts should be penetrative
They should understand the nature of the business
They should try to gauge the intrinsic worth of the business
They shouldn’t try to guess the unknowable future
13. OPTIMISM THE RIGHT WAY -
SUMMARY
To be successful we need to:
Give up on that idea that we are investing “knowing”
the future
Focus in on what we can know
Accept that it is better to approximately right rather
than entirely wrong