Having pet peeves cannot only be related to things that annoy or anger you in your daily life, but can also be in investing as well. The pet peeves have a list of ten things that were said or done in the industry or said about the industry. The author discusses a list of peeves that share three characteristics: (1) They are about investing or finance in general, (2) they are about beliefs that are very commonly held and often repeated, and (3) they are wrong or misleading and they hurt investors.
The beginning five points would be grouped together in one section. First, peeve is Volatility” Is for Misguided Geeks; Risk Is Really the Chance of a “Permanent Loss of Capital”, says there are more fair methods to measure the chance of a
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Essentially, with a methodical approach, value and momentum are both great long-term strategies, but you do not want to be a impetus investor at a value time horizon. Fourth, Whodunit?, he refers to two events, (1) a real estate/credit bubble in prices that, upon bursting, precipitated (2) a massive financial crisis. The collapse of the real estate/credit bubble did not have to lead directly to the financial crisis to say who is to blame for these events. Fifth, I Would Politely Request People Stop Saying These Things, tells that certain words should not be used because it has different meaning like arbitrage means certain points in education, whereas trade we kind like. The second set of points starting with the sixth point. Sixth, The First Step Is Admitting It, has separate implication because it about the form over substance from market capitalization. Seventh, To Hedge or Not to Hedge ?, is that hedge fund reporting, by both the mass media and industry, is practically always wrong, but in a interestingly mixed way reliant on market direction and the preference of the analyst. His hope is that reporting and the whole hedge fund industry can improve and have a better value
Executive Summary of “Value and Momentum Everywhere”, C. Asness, T. Moskowitz and L.H. Pedersen, The Journal of Finance, 2013
The idea of “risk” is used in many fields and industries. There has been large efforts made towards the understanding of risk. Since, risk varies so much depending on the field of study, the need for learning about it is warranted. As can be imagined, the importance of risk in a market economy is crucial. In the 1990s, JP Morgan made the Value at Risk (VaR) a central component of its work efforts (Cecilia-Nicoleta, Anne-Marie, & Carmen-Maria, 2011).
Investing behavior should be driven by information, analysis, and self-discipline, not by emotion or ‘hunch.’
In February 1995, Adam Bain, investment advisor in the London, Ontario branch of RBC Dominion Securities Inc. (RBC DS), was considering whether or not to implement a price momentum strategy for his clients. Trend and Cycle, DS’s technical research department, had recently circulated a copy of a study which described a simple price momentum model and referred to its “startling results” based on back testing the strategy over a 15 year period. The Trend and Cycle group had long promoted the importance of price momentum and relative strength to potential clients. Bain needs to determine whether the proposed model was “too good to be true” or, if it did not look promising, how he would go about
Mr. Lee and the other executives expect to generate a higher profit from hedging since they have majority of their personal wealth invested into the firm. The focus of any hedging program should always be to minimize the firm’s risk of loss, but that does not mean the they will
Cernauskas, D., & Tarantino, A. (2011). Essentials of Risk Management in Finance. Hoboken: John Wiley & Sons, Inc.
Michael Hiltzik, a “Las Vegas Times” columnist, is a slap-in-the-face, capital-oriented, theme-based writer that shares many of the same views that I do, politically, economically, socially, and most importantly, entertainmentwise. My favorite part is always the second paragraph, which is generally a flat-out slice of facts with a side of some cold, hard truth that hits people like windshield wipers hit bugs. Believe it or not, Hiltzik, although predominantly economic, also spends time printing articles that have to do with the latest movie or the current sports teams and still manages to tie them into how they fluctuate the stock market. The stock market has always been an interest of mine since my grandfather is a stockbroker, and although
Another main idea concept in chapter seven, is speculation. Speculation is the practice of taking full advantage of the market’s fluctuations, anticipating large returns. Essentially, speculation is like betting on the market. A real life example could be buying stocks. If someone speculating bought a stock, he or she would have purchased the stock because he or she expects the stock to grow. I think that speculation is a very risky method because the market varies very often; the risk outweighs the reward. (157-158)
The topic of activist hedge funds, and the freedom in which they are allowed to target companies has risen a lot of concern amongst politicians, CEOs and the American public. Thus, the proposed rule has attracted a lot of attention and many comments, either for or against the rule.
This document is authorized for use only by Yen Ting Chen in FInancial Markets and Institutions taught by Nawal Ahmed Boston University from September 2014 to December 2014.
Established in January 1999, Pine Street Capital (PSC) was a market-neutral hedge fund that specialized in the technology field, facing market risk and trying to decide whether and which way to use in order to hedge equity market risk. They choose technology sector because the partners of PSC felt that they have enough ability to evaluate this sector and specially be good at picking out-performing stock. Short-selling of NASDAQ and options hedging strategy are the two major hedging choices for PSC. Either strategy has its own advantages in different economic periods and conditions. The fund has just through one of the most volatile periods in NASDAQ 's history, and it was trying to decide whether it should continue its risk management
c. What is the stated intent of ABX’s hedging program? What are the arguments for managing gold price exposure?
In examining hedge fund structure, we quickly recognize its primary limitation: exclusivity through the accredited investor clause. This clause states that for a hedge fund to avoid the basic limitations of other more traditional fund structures, retail investors must have a thorough understanding of the investment profile of the fund, as well as over $5 million in investible assets. For institutional investors, this number is $25 million. While this clause allows Hedge Funds to avoid registration with the SEC, it restricts the fund from accepting any non-accredited investors from investing in hedge funds. This population constitutes the vast majority of investors domestically. Furthermore, as
They blame others when things go wrong. Ah blame. It's so easy to do! After all, if it's "their fault" you don't have to change, and your ego goes unruffled. But the thing is when you blame others, you lose the lesson. And when you are trading or investing, you definitely cannot afford to lose a single lesson.
In their research study, Souder & Myles (2010) identify that risk is chiefly fundamental to investing. Böhringer & Löschel (2008) further add that there is no discussion of returns or performance that is deemed meaningful in the absence of at least some mention of the involved risk. However, the trouble for investors, who have just entered into the marketplace, involves the process of figuring where risk really lies, as well as what the difference between the various levels of risks. Relating to the manner, in which risk is fundamental to investments, a significant number of new