Investment
Analysis II
Welcome to MGMT-6330 Investment Analysis II
Convenor:
Houman Younessi
email: youneh@rpi.edu
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
Objective
Advanced study in Investment Analysis and Risk Management.
Emphasis is on fixed-income analysis and derivatives in the
context of portfolio management. Topics will include the use of
options, futures, emerging markets finance, and fixed-income
alternatives. Bond pricing, term structure, duration, and convexity
are examined. The role of alternative asset classes, private
equity, and hedge funds in an efficient portfolio is explored. Other
topics include the International investment environment, a
historical examination of speculation in the financial markets, the
role of Behavioral Finance and fiduciary duty in investment and
business decision-making. The role and use of technology in
developing and executing financial models is embedded in
course content.
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
Textbooks:
Swensen, D.F.; Pioneering Portfolio Management; Simon and Shuster – Free
Press; 2009.
Nofsinger, J.R.; The Psychology of Investing; 3rd edition; Pearson Prentice –
Hall; 2008
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
Grading:
Group Workshop Assignment
20 Percent
Team Project
50 Percent
Manager evaluation
30 Percent
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
Scope of course is:
INSTITUTIONAL
portfolio
management
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
University endowment management is probably the
best form of institutional portfolio management
- Long term
- We all know the business
- Needs are often more complex than corporations
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
Let us start at the beginning:
Objective of all (sane) investors:
return good results
How?
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
Trouble is:
Most, yes most, buy high and sell low
Buy high:
- Exuberance
- Herd mentality
Sell low:
- Despair
- Herd mentality
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
If you make a 50%
loss, you have to
make a corresponding
100% gain to just get
even
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
Must Play Defensive
Defensive does not mean
making conventional or
conservative investments or
employing unimaginative,
unoriginal, and “proven”
staff and external fund
managers
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
It means:
Ensuring technical competence and
knowledge and understanding of:
- Finance theory
- Macroeconomics
- Financial and sectoral
history
- Current affairs and events Safeguarding against biases:
- Incentive and ethical based
biases (the principal/agent
problem)
- Psychologically based
- Self deception
- Simplification
- Yielding to disposition 11
Investment Analysis II - © 2012 Houman Younessi
Investment
Analysis II
LET THE
GAMES BEGIN
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
So, what have we learned?
Communication is tricky, we have to be careful with the data we are given
We are often not as good as we think we are
The world is often not as simple as we think it is
The world is complex enough, do not over-complicate things
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
So, what must we do?
We must:
Know the theory and tools
Know ourselves
Know others
Know the environment
Know the market
Investment Analysis II - © 2012 Houman Younessi
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Investment
Analysis II
Theory and tools
QUIZ
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