Introduction Handout

Introduction Handout - {D Bus 177 B Fortfolio Management...

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Unformatted text preview: {D Bus. 177, B Fortfolio Management Frank .!. Jones, Fh. D. Introduction "Class One" .. ;.i i. t; t;'l:, . l.-e .r::.r r':-,r:: .,--:-_.: - : ": r.'l':"ir'. -lA-..,- '' - : -.-: -...-,.-:.-i i;': l-:, - ;:-' i:i :r:1 : t\ i I i-r::il:Li .ii i : : t t: ] :1i't il : " 1,/26109 ;)-,---- ^-. J L-i_jliii- , . . a,zzsS.Sp"lt T:ri f ,A1,'.. -TIitil'lt.r':Li-{1. 'Are you ittt'zstirLg fiar grtrl';rh, i+'gairft ,Siesrnrdft.rrt- ltL:tiftv ot t;ci:e:t;ir::?' Content of Course L. Theory r Many courses teach only this; ' Theory, however, is the prerequisite for all that follows 2. Application r Manage your orvn portfolio well in the current environment 3. Financial Press . Read and understand the financial press 4. Street Smarts . Don't get picked off 5. Wisdom . This goal aims high; . But start the long tern process now. 2 tnvestment Management Security Selection Portfolio Development-!72A- -1728- "Buying the vegetables" "Making vegetable soup" Comments: r Need good vegetables to make good vegetable soup . But can make bad vegetable soup out of good vegetables (e.9. all good okra) r By analogy, need good securities to develop a good portfolio \!/. r But can have a bad portfolio composed of all good securities (e.g. all large cap technology stocks) lnvestment Approaches Pick the Securities (r72A) "Buy the vegetables" Buy lndividual securities Very difficult (impossible?) and time consuming Pick the Pickers (r72 B) "Buy the vegetable soup"-Buy managed portfolios . Mutual Funds . ETFs . Closed End Funds . Hedge Funds . Etc.-lnvestor still has to form a portfolio of these rnanaged portfolios Difficult but doable without being too time consuming lnvestor Requirements/ P refere nces TJ-p_e of Inve_slgJ l-. lnstitutir:nal e Mutual Funds 2. incfividual Secu ritllAlr alvsis_/ Portfo I io Ana lvsis ( 172A1 Psrtfsl io Alaltrsis { ITLB) Environmental lnfluences c Wlren ' How Much t7? B ln L72B we do zuOT learn how to: / pick indirridual stocks . 172A (for security selection) " Efficient Market Hypothesis 1 Forecasi the stocks market n "Fools and Liars" o Alan Greenspan vs. "Talking Head" We S* learn how to: / Develop ideal portfoiio for an individuaI investor from securities/asset classes Wealth and lnvestn'lents Examples: .i. Bill Gates + Warren Buffet Comment: How do you get a small fortune? Start out with a iarge fortune, and invest badly. Problem: Most of us do not start with a large foi-tune Enough Weolfh Too Much Wealth stments Enough Wealth Too Little Weolth 7 Depends on Nature of Business; Government; Households. Overview of Financial Markets +------+ Secondarv Markets (2) . Continuous pricing of securities Depends on Liabilities/Product Primarv Markets {3) . lnitial pricing of securities Mutual Funds Pension Funds lnsurance Companies Banks Other lnstitutions Retail Securities (1) ' Nature of Cash Flows ......
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Introduction Handout - {D Bus 177 B Fortfolio Management...

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