Narach Investment

Investment Management: An Introduction

The main reason for the publication of this website, is to make you (the reader) aware of the investment world and how to manage your way around it. And also what the investment advisors are expected to explain to you.

Introduction

Investment is putting aside and employing money in financial instruments in the present, with the expectation of a positive rate of return in the future.

The 5 Questions

Before taking on the exercise of investment and its management, the investor is well advised to do the planning before hand and ask all the questions he or she can.

Why to Invest?

The investor would want to invest mainly to increase the rate of return on his assets.

What to Invest?

The investor would mainly invest his time, effort and financial resources (including savings and reserves) in this endeavor of investment management.

Where to Invest?

There are many financial investment avenues available today to the investor.

When to Invest?

Here the investor would decide when to invest (or buy) and when to divest (or sell) a financial instrument, keeping the return on investment in mind.

How to Invest?

This would require the investor to have in place an investment system with all its checks and balances.

Investment Management Process

The starting point would be to understand the investment management process.

Setting the Investment Objective

The first step for the investor is to set the investment objective.

Establishing Investment Policy

Setting policy begins with asset allocation amongst the major asset classes available in the capital market.

Selecting the Portfolio Strategy

The portfolio strategy selected would have to be in conformity with both the objectives and policy guidelines.

Selecting the Assets

It is of importance for the investor to select specific assets to be included in the portfolio. It is here that the investor or manager attempts to construct an optimal or efficient portfolio.

Measuring and Evaluating Performance

This step would involve the measuring and evaluating of portfolio performance relative to a realistic benchmark.

Investment Environment

A study and understanding of the investment environment would be of importance to the investor.

Introduction to the Investment Environment

To study the investment environment would be of importance to the investor, as it would also encompass the demand supply match/mismatch.

Investment Avenues

There are a large number of investment instruments available today.

Investment Attributes

To enable the evaluation and a reasonable comparison of various investment avenues, the investor should study the following attributes: Rate of return, Risk, Marketability, Taxes and Convenience.

Comparison of Investment Avenues

Comparison of investment avenues.

Investment Decision Making: Approaches

As investors we would have diverse investment strategies with the primary aim to achieve superior performance, which would also mean a higher rate of return on our investments.

Common Errors in Investment Management

In any endeavor we undertake, we are sometimes right and make correct decisions and sometimes we are wrong and prone to errors.

Investment and Speculation

There is a very thin and blurred line between investing and speculating or gambling.

Investment Wisdom

Listed below are wisdom one liners which would give an investor an insight to what he or she is up against.

Securities Market

The term securities markets enclose a number of markets in which securities can be bought and sold.

The Broker

As investors we are unable to deal with the markets directly. So, the markets introduce and authorize the middleman to act on its behalf. This middleman is also called the Broker.

Active Asset Allocation

Active asset allocation would be of importance to the investor with respect to decisions regarding where exactly to deploy his resources and in what proportion.

Introduction to Asset Allocation

Asset allocation or active asset allocation is of interest to all investors.

Asset Allocation Classes

There are three distinct classes of asset allocation. Namely, Long term asset allocation, Active asset allocation and Portfolio insurance.

Tactical Asset Allocation

Tactical asset allocation can be compared with sector rotation.

Management of Asset Allocation

Long term asset allocation is established on the basis of careful analysis. Tactical asset allocation provides the structure and a disciplined framework to prevent such errors. If in the equity market, one stock becomes undervalued relative to a second stock. Then money would flow from the second stock to the first, to bring it up and back to its fair value.

Asset Allocation Process

The asset allocation process would require a disciplined structure based on three assumptions. The securities market indicates the rate of returns available in the various asset classes. There is a normal relationship among these implied returns. The securities market correct disequilibrium conditions when they occur.

The Portfolio Upgrade

A portfolio comprises of two types or categories of stocks, namely the buy candidates and the hold candidates.

Using Futures in Asset Allocation

Transaction costs are the main hindrance to the active or tactical asset allocation process. The transaction cost has to be paid for whether the investor is buying or selling to accomplish a shift in the asset mix of his portfolio.

Investment Management and Trading in the Stock Market

Trading is basically buying and selling a financial instrument, like a stock quoted in the stock market. And making a profit from the transaction. That is the investor’s selling price is more than the cost price.

Estimation of the Intrinsic Value of a Stock

The procedure commonly used by investment analysts to estimate the intrinsic value of a stock traded in the stock market consists of the following steps: Estimate the expected earnings per share of the stock. Establish a price earning multiplier (or P/E ratio). Develop a value anchor and a value range.

Margin of Safety

The central concern of all investors in their investment policy is to always ensure a margin of safety in all their transactions in financial instruments.

The Time Value of Money

As investors it is of some importance and interest for us to have an understanding of the time value of money. And to appreciate the reasons why a unit of money (let's say the Indian Rupee) today has more value than it would have a year or two later.

Investment Management and the First Trade

So, we have buyers, holders and sellers who have all traded! Take a step back, and look at the sequence: buying, holding and selling. You would realize that these are the three parts of the same composite trade.

Investment Management and the First Position

A position in a stock is built over a period of time, while purchasing the same stock over various price levels. However, to begin with we would initiate a position only when we have a confirmation of oversold levels and that there is a reasonable margin of safety available to us.

Stock Market Investment Rules

The stock markets or equity markets are large market places or trading platforms in the modern sense of the word; where investors buy and sell equity shares or part ownership of various corporations representing various industries and services. To engage in this exercise of buying and selling equity shares the investor would be required to follow certain rules, to enable a successful and profitable conclusion to their transactions or trades.

Stock Market Investment Strategies

The stock market investment strategies are relevant to investors who are in it for the long haul. There are basically two strategies that an investor can apply the first one being to buy low and sell high and the second one being to buy high and sell higher.

Investment Management and Stock Market Simulation

An investor would be well advised to have an investment system in the first place. Then the investor would be required to test his system through stock market simulation. This would require the investor to conduct dry runs using pen and paper. In fact, in today's time and age it would be more appropriate to use a personal computer, to bring in a certain level of efficiency to this exercise.

Investment Management and Investor Preparation

At this stage we expect that the investor has done the preliminary preparation to undertake his investment management exercise.

Psychology of the Successful Investor

The equity and other markets across the globe are full of investors. Some are successful, some meandering along and others facing outright failure.

Qualities of the Successful Investor

Given the potential rewards, the risks being reasonable and given a method of well-defined risk management the equity markets across the globe (to our thinking) are the best game in town. However, the investor would require qualities of head and heart to achieve this success. These qualities of the successful investor listed and described below, would also be relevant to the other financial markets.

Risk and Return

When the investor want to invest his money at a higher rate of return there is a higher factor of risk.

Market Efficiency

Market efficiency describes the operating characteristics of the capital market.

Etrade and the Three-In-One Account

Most investor seek a certain level of efficiency and safety with regard to their transactions in the stock market while buying and selling stocks for and from their portfolio; and also the suitable crediting and debiting of the monetary amount or value of their transactions to and from their savings bank account, respectively.

Investment Management and Mutual Funds

Mutual funds and their various portfolios under management are addressed towards individual investors (both men and women) who are otherwise busy with their mainstream careers; and probably have very little time available to attend to their personal investments. A mutual fund is a portfolio comprising of various financial instruments ranging from investment grade stocks traded in the stock markets to high grade bonds and government securities depending on the underlying objectives of the specified mutual fund under study; and the corpus of the same is managed by fund managers and financial specialists.

Investment Management and Forex Trading

You may have heard about Forex trading and seen many sites on the internet propagating this seemingly great investment opportunity. In fact, a lot of interest has been generated in this investment instrument. There are some organizations running TV commercials, offering this Forex trading as a sure fire system that is expected to bring windfall profits in an easy fashion to the individual investor; along-with the fine print of a disclaimer.

Investment Management and Real Estate

One of the most consistently returning asset classes as an investment over the long term; and the one that the majority of us can profit from is real estate. However, good management skills on your part is a prerequisite.

Real Estate and Home Loan Secrets

Building a home is amongst the primary objectives of any reasonable and right thinking man and family. However, the demographics, the age group, cultural background, peer group influences have a role to play in regard to the decision and timing of building and living in your own home.

Role of Options and Futures

With the introduction of options and futures, investment risk management has assumed a new dimension. Though the manager can achieve a high degree of freedom, it does not alter the market profile of an equity portfolio economically or quickly.

What are Options?

Stock markets by their very nature are fickle. While fortunes can be made in a jiffy, more often than not the scenario is the reverse. Investing in stocks has two sides to it: a) Unlimited profit potential from any upside; or b) a downside which could make you a pauper. Derivative products are structured precisely for this reason; that is to curtail the risk exposure of an investor. Index futures and stock options are instruments that enable the investor to hedge his portfolio or open positions in the market. Options contracts allow you to run your profits while restricting your downside risk.

Types of Options

An option is a contract between two parties giving the taker (or buyer) the right, but not the obligation, to buy or sell a parcel of stocks or shares at a predetermined price; possibly on or before a predetermined date. To acquire this right the buyer pays a premium to the writer (or seller) of the contract.

Option Styles, Class and Series

It would be useful for the investor to know that the settlement of options is based on the expiry date. However, there are two basic styles of options you would encounter which effect settlement. These styles have geographical names, which have nothing to do with the location an options contract is agreed upon! These styles are European options and American options.

Option Concepts

The investor would find it useful to know certain important terms used with regard to transactions in options. These terms are listed below: Strike price, In-the-money, Out-of-the-money, At-the-money, Covered Call, and Covered Put.

Investment World and Reflections

With the recent advances in investment theory and practice, we have seen the advent of new products, strategies and investment assets.

Creating a Business Strategy

On a scale of one to ten, having a good business strategy for your investments and its management rates about a fifteen! No matter what kind of businesses you have in your portfolio - whether they sell products or a service. If you fail to plan your investments, then you're really planning to fail.

Checklist for starting a Business

After having created a business strategy, the investor would then be required to have at hand a checklist, mainly to minimize errors during the process of setting up the business. Think of this as your business road map.

Formation of an Investment Club

As individual investor we are in a minority in the vast stock markets and in fact any other market. However, collectively we are a force to be reckoned with in the very same stock market.

The Links Page

The internet or the world wide web has millions of websites on investment management and allied fields of study. We have put together links to other websites which we expect would be relevant to your search and investigation.

Search Results

The main reason for the publication of this web page, is to enable you (the reader) to search the web without leaving our websites.

Privacy Policy

The privacy of our visitors is important to us. At Narach Investment, we recognize that privacy of your personal information is important. Here is information on what types of personal information we receive and collect when you use/visit our website and its various web pages, and how we safeguard your information. We never sell your personal information to third parties.

Disclaimer

This website and all its web pages are academic in nature and free to be viewed by all visitors. The information contained in this website is for general information purposes only. The information is provided by Narach Investment and whilst we endeavor to keep the information up-to-date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.

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Narach Investment Blog

It is our endeavor to make you (the reader) aware of the investment world and how to manage your way around it through our website. And also what the investment advisors are expected to explain to you.

Narach Philosophy

The main reason for the publication of this website, is to make you (the reader) aware of the Mimansa, a study of the secret of the sacred books of the Hindus; that is the Vedas. Mimansa means a reverent study leading to a scientific quest of truth. This search for truth leads us to the solution of the great problems of life, and has engaged us for thousands of years. The real problem of life is the attainment of happiness and the avoidance of misery and pain. Our ancestors before us have reflected and contemplated on these aspects of life and realized that pleasure is but a passing phase in an endless stream of pain. They concluded that, permanent happiness can only be attained with the total extinction of pain.

Narach Philosophy Blog

It is our endeavor to make you (the reader) aware of the Mimansa, a study of the secret of the sacred books of the Hindus; that is the Vedas. Mimansa means a reverent study leading to a scientific quest of truth.

Narach

The main reason for the publication of this website, is to create a holding website for the other websites and sub domains we have at present and would create in the future with relevant content and web resources to suite the needs and requirements of the visitors of our websites.

Narach Finance

The main reason for the publication of this website, is to make you (the reader) aware of the world of finance and how to manage your way around it. We expect, that after studying the material given on the various web pages of our website listed below, you would be more aware and better prepared with respect to your financial goals and objectives and decisions you would take in this regard. Many people who wish to start their own business need an injection of financial capital at the beginning of a business; the main source of funding for entrepreneurs is business loans.