Investment Articles

Many wealth managers approach investors positioning themselves as “trusted advisors”. Can you develop this type of relationship with someone who is compensated for selling product, or should you seek out a wealth manager who operates without conflicts of interest between the firm and the client? As more independent advisors arise, this question will present itself more frequently to investors.

One of the biggest complaints investors have is that they feel they are being “steered” towards specific investments by their advisor. Frequently, these products are manufactured and/or managed by the firm that employs the relationship manager. They can take the form of mutual funds, managed accounts, or partnerships. This is true for brokerage firms, investment banks, and trust banks. In many instances, the compensation of the “trusted advisor” is largely impacted by how much proprietary product he or she can sell. With that type of motivation in place, it is fair for investors to ask if their best interests are being placed first.

Some large financial services firms responded to investor’s lack of trust by creating a “platform” that includes a limited number of outside advisors side by side with their own offerings. This is frequently presented in the form of a “wrap” program that entails a large, all-encompassing fee. The wrap fee includes compensation to the investment manager, the advisor, and the advisor’s employer. These layers of fees add up. While convenient, it may prove to be an expensive proposition to the investor. As a result, many investors are gravitating to fee-only independent wealth managers who offer open architecture in a conflict-free manner.

The role of a fee-only advisor is quite different from that of the more traditional relationship between the client and his broker or trust officer. A fee-only wealth manager does not and will not manufacture or sell investment products; their only source of income comes directly from their clients. They will refuse compensation from investment managers, insurance companies, banks, and other sources of investment merchandise. His or her role is to work with you to structure a multi-manager portfolio that fits your specific investment needs. The advisor will likely spend time with you to understand your goals, objectives, and risk tolerance long before the investing process begins. Many fee-only advisors have Certified Financial Planners on staff. These professionals will work with you to ensure that you have the right structure around your assets (i.e. wills, trusts, etc.) to help you meet you your long-term financial goals in the most tax efficient way possible.

It is becoming more difficult for investors to pinpoint outstanding investment talent. There are so many choices that one can become overwhelmed. Fee-only wealth managers offer true open architecture. They are not limited by an investment platform. This enables them to seek out the best and brightest managers in all asset classes. You should expect that your wealth manager has conducted a thorough amount of due diligence on each of the managers in the suggested portfolio. The advisor should suggest separate accounts over mutual funds. Separate accounts are less expensive and more tax efficient than commingled funds. Since your advisor is not compensated for transactions in your account, he or she will probably recommend that your assets be held at a large discount brokerage firm. This will help minimize overall costs to you. While you will be receiving monthly statements from your brokerage firm, the wealth manager should provide consolidated performance reporting on a monthly basis.

To review, here is what individual investors should expect from an independent, fee-only wealth manager:

* A thorough independent appraisal of your current investment portfolio,
* A discussion about what you want to accomplish with your investment capital,
* An examination of the structures around your assets such as wills, trusts, and retirement plans,
* A well-designed asset allocation model that fits your investment goals,
* A suggested multi-manager portfolio that foots with your goals and objectives,
* Thorough and ongoing due diligence on each of the managers in your portfolio,
* Face-to-face meetings at least twice a year to update you on performance and review your objectives,
* A strong effort to reduce investment costs (i.e. manager fees, brokerage commissions, etc.),
* Monthly performance statements,
* No pressure to buy or sell any investment product,
* A fee based upon the amount of assets under advisement.

Fee-only wealth managers offer an attractive alternative to traditional sales-based financial relationships. You have the comfort of knowing that the advisor is working in your best interests and that all recommendations come from a desire to do an excellent job for you.

Copyright 2010 Massey Quick and Co., LLC – All Rights Reserved

Stewart R. Massey is a Founding Partner and the Chief Investment Officer of Massey, Quick and Co., LLC, an investment consulting and wealth advisory firm. Founded in 2004, Massey Quick provides comprehensive wealth management services to high net worth families and individuals and traditional investment consulting services to endowments and foundations. More information is available at http://www.MasseyQuick.com.

As a Socially Responsible Investment manager the most common question we hear from potential clients is “and adviser told me that socially responsible investing isn’t profitable” versus non-screened portfolio management. In general the adviser providing the dogmatic opinion does not offer any foundation for their opinion but this is their chance to influence the potential client especially if they cannot offer an Socially Responsible Investing (SRI) option for the investor. Unless you have a few arrows of your own in your quiver you may be quite likely shrug your shoulders and resign yourself to an non-screened portfolio versus a clean portfolio.

Probably due to the fact that I’m over 50 now with a repellent view of hyperbole and unsubstantiated opinions I have been uncomfortable with opposite view as well: socially responsible investing improves rate of return. It has been my view based upon empirical experience of managing Socially Responsible portfolios for 20 years that social responsibility is not a significant determinant of investment performance. Socially Responsible Investing is a highly subjective practice where investors can have divergent opinions on industries and companies. There is not unified screening standard amongst the ethical investing industry, each firm or fund makes their own decisions on screening criteria. While some funds screen for only 3 or 4 issues there are other funds that screen over a dozen.

Practitioners of ethical investing may draw attention that investors always assume a given level of risk with any equity investment but that the risk premium associated with SRI is less. Case in point the risks associated with Tobacco, Asbestos or BP and the Gulf oil disaster. However in my 20 years involved with socially responsible investing, screening stringency is often a matter of interpretation as BP was considered Best of the Lot for many years for funds that desired petrochemical exposure.

Let’s take a look at some of the academic studies that have touched upon the issue of the factors of Socially Responsible Investment performance:

* Moskowitz Award winner, John Guerard, Jr., director of quantitative research at Vantage Global Advisers, examined the returns of Vantage’s 1,300 stock non-screened stock universe and a 950 screened universe (The screens eliminated companies that failed to pass alcohol, gambling, tobacco, environmental, military, and nuclear power). He found “that there is no significant difference between the average monthly returns of the screened and non-screened universes during the 1987-1994 period. The “un-screened 1,300 stock universe produced a 1.068 percent average monthly return during the January 1987-December 1994 period, such that a $1.00 investment grew to $2.77. A corresponding investment in the socially-screened universe would have grown to $2.74, representing a 1.057 percent average monthly return. There is no statistically significant difference in the respective returns series, and more important, there is no economically meaningful difference in the return differential.”

Guerard’s conclusions are reinforced by other works:

* “Socially Responsible Investment: Is it profitable” Dhrymes, Columbia University July 1997 June 1998.Dyrymes concluded that: “that by and large the Concerns and Strengths of the KLD index of social responsibility are not consistently significant in determining annual rates of return.”

* Socially Responsible Investment Screening Strong Empirical Evidence For Actively Managed Value Portfolios. June 2001, revised December 2001 Stone, Guerard, Gultekin, Adams.”No Significant Cost” means no statistically significant difference in risk adjusted return”. In addition, they surmise that “the conclusion of no significant cost/benefit is not just a long term average. It has remarkable short term consistency!”

In my opinion this report presents a balanced view in that they concluded that the during the time of the study 1984-1997 the stock market rewarded the growth oriented style and that the performance of SRI investments could become “brittle” if markets were to become risk averse and adopt a more Value oriented style……….a remarkably accurate presumption!

Could the performance of SRI funds which have exceeded or lagged their respective benchmarks be in part due to size (average capitalization from micro cap to large cap) and style (Value or Growth)?

Fama and French of Dartmouth University examined the annual rate of return and beta (volatility) of an non-screened universe of Growth vs. Value from 1928 to 2009 by dividing stocks into ten deciles (groups) based on book-to-market value, rebalanced annually and found that Value had the lower risk while Growth had the higher risk. In addition, they found that the highest book -to-market stocks exceeded the return of the lowest book-to-market by 21% to 8% on average. Stock valuation was as significant factor in the Fama and French study where the cheaper the equity valuation the better the return.

Market Cap size was important in the Fama and French study as well (1992). Market cap size showed a significant edge to small and micro cap equities on a monthly basis. *Monthly returns for the smallest 10% of equities were 1.47% versus 0.89% for the largest decile.

It is our contention that there are attributes that could account for performance to equities other than social profiles and that concurrently a portfolio of socially screened equities with the highest book-to-value ratios could exceed comparative benchmarks largely due to valuation metrics and capitalization size. In a case of pure cherry picking the monthly rate of return smallest market cap and lowest book value to market price was 1.63% versus.93% monthly for largest market cap and highest book value to market price.

I tested this theory using data supplied by the Social Investment Forum and Russell Index regarding the 10 year average rate of return for socially responsible mutual funds versus their respective benchmarks trends do emerge.

Data as of June 30, 2010

Benchmarks

* Russell Mid Cap Value Index was the top 10 year performer +7.55%.
* Russell Mid Cap Growth Index returned -1.99%.
* Russell 2000 Value returned +7.48%
* Russell 2000 Growth Index returned -.92%

Equity Large Cap performance (information provided by SIF)

* 4 mutual funds show positive 10-year average annual rates of return:
Calvert Social Investment Equity +0.14% (Growth)
Neuberger Berman Socially Responsive +3.18% (Value)
Walden Social Equity +1.46% (Value)

Parnassus Equity Income +4.65% (Value)

Equity Small Cap performance

* 2 mutual funds from one mutual fund company showed a positive 10-year rate of return.
Ariel Appreciation +6.16% (Value)

Ariel Fund +5.62% (Value)

Disclaimer: While the sample size of SRI fund performance is very small. I gleaned data from only the profitable SRI funds for the last 10 years. The SIF forum does not show fund performance information for funds that have closed, merged or liquidated. It would be a safe presumption IMO that funds that no longer exist were weak performers since money will flock to where it’s treated best. Plus, hedge fund performance data was not available on the SIF site.

The results do fall in line with substantial academic works (Fama and French, Lakonishok) and it is possible that SRI performance should be viewed thru the lens of Value/Growth and Market Cap size.

A logical question that must be asked upon reading this might be: “If small market cap and low valuations are the sweet spot for investing, then why are there so few funds or managers focusing on this strategy?” Not to be obvious… ok, well lets be obvious: The small cap / low price to BV tends to be the focus of many private portfolio managers since our small size allows us the dexterity to invest in companies that are simply too small for billion dollar mutual funds. Successful funds tend to outgrow the size/valuation strategy espoused by Graham as assets become larger and the investment selection becomes narrower. But this topic should best be explored at a later date.

No holdings mentioned.

Brad Pappas
President of Rocky Mountain Humane Investing
Allenspark, Colorado
303-747-0500
http://www.greeninvestment.com
copyright Rocky Mountain Humane Investing, Corp 2010

With literally thousands of managed funds available, selecting a good one can be a daunting task. Following a few simple guidelines will assist in picking a sound one.

Objectives and Timeframe
Part of the key to picking a good managed fund is first looking at your own personal situation. A retiree may look for a fund with solid income (i.e. regular dividends or distributions along with a high yield), whereas a young first time investor might be looking for long term capital growth. The former might be reliant on their managed fund for income, whereas the latter might prefer a fund that re-invests dividends, potentially leading to even greater returns at a later point in time. The proportion of one’s investments a proposed managed fund is likely to be (including other stock investments, property etc) also needs to be considered.

Risk Profile
Staying with the same example, a retiree who has accumulated substantial assets might elect to choose a managed fund with lower risk, to maintain those assets (for example, a diversified fund, or a fund that invests in only larger “blue chip” securities). Such a retiree’s assets, if diversified, might allow for investment in a higher risk, but potentially higher reward fund (such as a sector specific fund, or a fund that only invests in small start up companies) if this makes up only a small overall proportion of their net wealth. Conversely, if a first time investor’s proposed managed fund investment is likely to make up a high proportion of their savings, then investing in a lower risk fund may be more prudent. Risk may be able to be increased as savings are built up over time, and investments diversified.

Independent Research Houses
Every fund manager is always going to sing the praises of their own products. Highlighting attractive investment returns over one year as compared to similar funds might not tell the whole story – the comparative returns over three or five years might not be as attractive. An independent research house can assist in providing detailed analysis of a fund, and also the fund manager’s relative merits. Bear in mind that fund managers pay independent research houses to research their funds.

Consistent Track Record
Look for a fund manager and a fund that have provided reliable returns over a medium to longer term timeframe (more than 1-2 years). Short term performance can sometimes be anomalous. Performance also needs to be viewed with regard to overall market conditions. A rise of ten percent in a year is great compared to bank interest, but very poor if the overall market has risen thirty percent.

Past Performance Is Not Necessarily An Indicator Of Future Performance
This common disclaimer does highlight the inherent risks in investing. One take away from this is that it is important to look at past performance, but it is equally important to look at the reasons behind the figures. Are the results based on sound investment principles or good fortune? Does the fund manager’s outlook and strategy give you confidence in their ability to continue to provide you with good returns in the future?

Share Trading can contain many pitfalls. Heed each of the factors listed above, and you will give yourself the best chance of choosing a managed fund with positive performance.

William Shaw is a boutique investment manager which specializes in offering Managed Accounts to private individuals, Self Managed Super Funds and financial planners in Australia. Our Managed Accounts service has outperformed the ASX 200 by 23.32%. For more information about our managed share investment service and about our high conviction active investment methodology, visit Managed Funds

There are two main types of accounts that you can have when it comes to purchasing securities. These are active and passive accounts. It is up to you to choose which is right for your investment style and portfolio.

A professional manager can make all the difference in the world in helping you make money and to keep you from loosing a lot of money. You can be your own professional manager, but that requires hard work, education, and time from you. I know a lot of people that use other people as well as do it themselves. It is all who you are and who you want to be. If you don’t want to manage money and have no interest, then you should find a great money manager.

An actively managed account is overseen by an institution who’s investment experts watch your money. They research the top companies that are on the market and offer them to you to invest your money in. Some of these people often trade many times per day, all depending on what you want with your money. You will need to look into the investment managers track record to see that know what they are doing. Interview and sit down with them. Don’t just hand your money over to someone that you think will do a good job. This is money you have worked hard and long for. Look online at sites like MorningStar or Value Line to see reviews of good companies to work with.

A passive management style is very common also. These type of strategies involve a lot of buying and holding. This type of account just needs to be over seen everyday to make sure they don’t keep a loosing stock. Most of these accounts will be based off a particular index that the account manager will want to mirror. If you take the Dow Jones Industrial Average for example. Lets say a fund manager wants to mirror this fund because they think it will be going up. They will most likely buy the DIA or the actual Dow Jones fund to mirror this. It is a very good strategy and can help you make money.

Darius has been writing online for a while now and has a lot of different interests. You can check out some of his websites at http://www.colemanmosquitodeleto.com and http://www.citronellabarkcollar.net

Trust deed investing has been around for many generations, yet today it seems few people are familiar with how it works or how it compares to other investment options. The economic signals today are mixed and confusing, and investors are understandably unsure about what to do. Invest or sit on cash? Invest in what? Trust deed investments offer one of the best opportunities, and risk-adjusted yields, available today when compared to the other major alternatives: stocks and private equities.

Trust deed investments are among the best risk adjusted yields available today.

First let’s understand the inherent value of risk-adjusted yield. Simply put it is the return potential of a given investment relative to its risk, where the risk is generally measured by volatility. Commercial trust deed funds historically yield consistent returns in the 9%-12% range annually, with very little volatility. Other assets, say small cap stocks or funds for example, have the potential for much higher returns but with much greater chance of loss as well. So the commercial trust deed fund would have a higher risk-adjusted yield.

Stock Market

If we now look at the major stock market indexes and compare them to commercial mortgage funds we see how this pattern plays out. The chart shows three major stock market indexes versus the lower end average of commercial trust deed funds. While there are slight variations among the indexes they all follow a similar path, and all show a lot of volatility. It’s interesting to note that this particular chart shows the stock market during the best part of the recent economic bubble, and stops before the market imploded in August of 2008. While there are periods where the market outperforms trust deeds it is impossible to time the market perfectly, and as we’ve all painfully learned recently those profits can disappear quite literally overnight.

Another important distinction is the collateral behind the investment. Theoretically an equity holder’s investment is backed by the company’s assets, but in reality your capital can disappear into the wind. (Just ask shareholders of Lehman Brothers or the Madoff funds.) Trust deeds are backed by valuable, and tangible hard assets: real estate. While real property can and does drop in value it is not subject to the minute-by-minute trading of wall street, and most real estate will always have some economic value. If the private money lenders do their job right there is ample collateral backing every trust deed investment. And don’t forget, when things go bad the lender (trust deed holder) is first to get paid, but the equity holder stands at the back of the line.

Private Equity

Private equity is exactly what it sounds like: investing money directly into a private company in exchange for an ownership stake. The attraction, of course, is that these mostly smaller, early stage companies offer the chance for eye-popping profits if and when they become successful.

Of course, that’s a big IF. Truth is most of these companies fail, or at least fail to achieve any sort of real value. On top of which investing in private companies is a tremendous amount of work and generally requires significant expertise. This is why it is mostly done through private equity or venture capital funds. (We’ll ignore Angel investing for the time being.)

So what about those eye-popping returns? Well, private equity and venture funds operate on basic portfolio theory. That is, out of every 10 investment about 6 will go completely bust, 4 or 5 will do ok and 1 or 2 will knock it so far out of the park that the fund overall provides a decent return. Nothing wrong with that if you have the stomach for that level of risk. Think of it as the extreme sports of the investing world. In fact, the amount of money required is so high and the risk so great that this is generally an investment class relegated to institutions and the extremely rich.

Stocks, bonds, mutual funds, and even private equity can be valuable tools in your investment toolbox. But the familiar, understandable, reliable and secure commercial trust deed fund should hold a prominent role in most investor’s portfolios.

Robert Purnell is President and Founder of Shepherd Capital Partners Inc., a commercial and private-money lender and trust deed investment manager with expertise in special use assets. For the past 15 years, he has been arranging financing and underwriting acquisitions on traditional commercial real estate and other special-use assets such as churches, senior housing and assisted living, medical facilities, self-storage, gas stations and more. You can learn more about Shepherd Capital Partners at http://www.shepherdcapitalpartners.com or call him at (415) 464-1004.

Copyright © 2008-2010

Trust deed investing has been around for many generations, yet today it seems few people are familiar with how it works or how it compares to other investment options. The economic signals today are mixed and confusing, and investors are understandably unsure about what to do. Invest or sit on cash? Invest in what? Trust deed investments offer one of the best opportunities, and risk-adjusted yields, available today when compared to the other major alternatives: stocks and private equities.

Trust deed investments are among the best risk adjusted yields available today.

First let’s understand the inherent value of risk-adjusted yield. Simply put it is the return potential of a given investment relative to its risk, where the risk is generally measured by volatility. Commercial trust deed funds historically yield consistent returns in the 9%-12% range annually, with very little volatility. Other assets, say small cap stocks or funds for example, have the potential for much higher returns but with much greater chance of loss as well. So the commercial trust deed fund would have a higher risk-adjusted yield.

Stock Market

If we now look at the major stock market indexes and compare them to commercial mortgage funds we see how this pattern plays out. The chart shows three major stock market indexes versus the lower end average of commercial trust deed funds. While there are slight variations among the indexes they all follow a similar path, and all show a lot of volatility. It’s interesting to note that this particular chart shows the stock market during the best part of the recent economic bubble, and stops before the market imploded in August of 2008. While there are periods where the market outperforms trust deeds it is impossible to time the market perfectly, and as we’ve all painfully learned recently those profits can disappear quite literally overnight.

Another important distinction is the collateral behind the investment. Theoretically an equity holder’s investment is backed by the company’s assets, but in reality your capital can disappear into the wind. (Just ask shareholders of Lehman Brothers or the Madoff funds.) Trust deeds are backed by valuable, and tangible hard assets: real estate. While real property can and does drop in value it is not subject to the minute-by-minute trading of wall street, and most real estate will always have some economic value. If the private money lenders do their job right there is ample collateral backing every trust deed investment. And don’t forget, when things go bad the lender (trust deed holder) is first to get paid, but the equity holder stands at the back of the line.

Private Equity

Private equity is exactly what it sounds like: investing money directly into a private company in exchange for an ownership stake. The attraction, of course, is that these mostly smaller, early stage companies offer the chance for eye-popping profits if and when they become successful.

Of course, that’s a big IF. Truth is most of these companies fail, or at least fail to achieve any sort of real value. On top of which investing in private companies is a tremendous amount of work and generally requires significant expertise. This is why it is mostly done through private equity or venture capital funds. (We’ll ignore Angel investing for the time being.)

So what about those eye-popping returns? Well, private equity and venture funds operate on basic portfolio theory. That is, out of every 10 investment about 6 will go completely bust, 4 or 5 will do ok and 1 or 2 will knock it so far out of the park that the fund overall provides a decent return. Nothing wrong with that if you have the stomach for that level of risk. Think of it as the extreme sports of the investing world. In fact, the amount of money required is so high and the risk so great that this is generally an investment class relegated to institutions and the extremely rich.

Stocks, bonds, mutual funds, and even private equity can be valuable tools in your investment toolbox. But the familiar, understandable, reliable and secure commercial trust deed fund should hold a prominent role in most investor’s portfolios.

Robert Purnell is President and Founder of Shepherd Capital Partners Inc., a commercial and private-money lender and trust deed investment manager with expertise in special use assets. For the past 15 years, he has been arranging financing and underwriting acquisitions on traditional commercial real estate and other special-use assets such as churches, senior housing and assisted living, medical facilities, self-storage, gas stations and more. You can learn more about Shepherd Capital Partners at http://www.shepherdcapitalpartners.com or call him at (415) 464-1004.

Copyright © 2008-2010

Not long ago investing was easy. There were few places you could invest and if you had money you wanted to invest, you left it to the professional stock brokers. However, deregulation of the financial markets has changed all this. In the past 20 years new investment products have been launched, changes have been made to the tax systems and retirement plans which have altered the attractiveness of many investment products.

Up to about 20 years ago, share investing was purely in the domain of the wealthy. For most people it was difficult to trade in overseas stock exchanges, there were no such thing as cash management trusts, installment warrants, exchange traded options, dividend imputation, reset preference shares and endowment warrants – to name a few. Now about 50% of investors are “mums and dads” investors who either own shares directly or in managed funds. Unfortunately, in recent years many investors have been “burnt” because they did not understand the risks of investing in financial markets.

Governments around the world have made it clear that it is important for people to take control of their own financial futures. The sustainability of government funded pensions is under pressure. If you do not save and invest, you will suffer a significant decline in your retirement living standard. The average life expectancy is about 80 years, so if you retire at 60 years of age, the savings you have accumulated in the 40 years of your working life will need to fund your retirement of 20 years or more.

Deregulation of financial markets, interest rates and currencies means that the market determines the value of investments and not government decree. This provides opportunities for educated investors to build wealth and for unwary investors to lose wealth. You must understand the opportunities and risks.

The ground rule is that if you want to be a successful investor in financial markets, you must educate yourself about investing. Even if you put your faith in a licensed investment advisor, not all are competent. It is essential that you understand how the financial markets work so that you do not put your hard earned money in the hands of an incompetent advisor who is only interested in the commissions available. How can you tell whether a particular investment is right for you? The only sure way is to become familiar with the language used in the financial industry and to have a sound investment strategy. Does this mean that you should keep you money safe by putting it under the bed or keeping it in the bank? No – but you do need to understand the risks involved and set ground rules for successful investing.

There are a number of ground rules in investing that haves stood the test of time. With time, patience and effort you can become a successful investor in all the areas that are open to you. This will not come overnight and you will have to be prepared for that fact there will be times you lose money. However,perseverance is a virtue above all others. The road is not always easy, but nothing worthwhile is.

Here are the ground rules for successful investing:

1. Be your own investment manager. No advisor or stockbroker should do it for you. Only you know what your real needs are, what your temperament is – and only you are motivated by your own best interests, not sales commissions. It is also more fun to do it yourself.

2. Confront risk and then reduce it through spreading your investments.

3. Take a contrarians view to investment markets. That is, look for opportunities and do the opposite of what everyone else is doing.

4. Do not be put off by investment jargon. Master it instead.

5. NOW is the best time to start investing. Do not wait for the markets to improve. If the share market is filled with gloom, that is the time to buy.

6. Make good quality shares the core of your investment strategy. Then you can rest easy when you invest in more speculative areas.

7. Always consider tax implications of making investments but never let tax minimization be the main objective. The fundamental rule is to think in terms of after-tax returns.

8. Keep up to date through reading the financial papers and searching independent investment research websites.

9. Discussing investments is stimulating. Condition your mind to talk to others about investing, especially people who are more experienced and knowledgeable than you are.

10. Do not be greedy. Discipline yourself to cut your losses with bad investments and cash in when you have made a reasonable profit.

11. Be patient. Rome was not built in a day. Similarly, you may not become wealthy overnight, but you will over time.

12. Never invest in anything you do not understand. If a particular investment sounds too good to be true, it usually is.

13. Pay yourself first. Most people invest money they have left over after paying the bills. Allocate yourself the first 10% of your monthly income to build up your investment capital. By doing this you will force yourself to become an investor and the long term benefits will be enormous.

If you master these 13 ground rules, you will be a successful investor. You will rival so-called professionals and will sleep easily at night knowing that money is the least of your worries.

Investment management, two words that are in the mind of anyone that has invested in a company or organization. What exactly do these two words mean? Strictly by definition, investment management is the professional management of assets and securities in order to reach an investment goal that is beneficial to the investor. Assets and securities can translate to numerous things from stock shares to real estate. The investor can be anyone, from a large business firm to an individual.

Directly related to investment management come the terms asset management and fund management. Asset management is a term that is commonly used to refer to the management of collective investments. Fund management is the more generic term. Fund management can be used when speaking about any and all forms of institutional investments, and can be used as well when on the topic of management by private investors. The professional investment managers who specialize and deal in advisory often have their services referred to as portfolio management or wealth management. These specialists often time represent the wealthy private investors.

In order to break down what takes place during the management of these investments, one would need to understand each related process. Among these processes are financial statement analysis, asset and stock selection, plan implementation and ongoing monitoring of the investment. All of these things can be handled by investment management services and advisers. This industry is both a large and important global industry which by itself is responsible for funds ranging in the trillions. As this is a global industry with investors from around the world, the trillions in funds are from every possible currency. Many of the largest companies in the world also take part in the industry by employing investment managers and staff, all of which results in billions in additional revenue.

How can all of this effect businesses? Generally speaking, large corporations often times control large amounts of shareholdings. Usually these businesses are more or less fiduciary agents instead of merely principals or direct owners of shares. By owning a large majority of shares, investors can theoretically control or alter a company they have shares in. This is possible thanks to the voting rights that the shares carry. How all of this could effect the management of a company is because of the simple fact that a share owner can pressure or possibly out-vote other shareholders at meetings.

Regardless of whether it is a large corporation or individual making an investment, having the proper tools and knowledge to manage that investment is critical when thinking of success. Corporations and individuals alike rely on specialists to oversee and manage their investments. Merely trying to jump in to the industry by purchasing shares and investing in a business most likely isn’t a sound choice. Seeking the aid of a professional with knowledge of the industry beforehand can help an investor from losing money in their investment, and overtime help to achieve a profitable outcome. When it comes to investment management, it is most likely the safest choice to seek aid from an expert, rather than attempting to do it yourself.

If you are looking for more investment plan and guide. Please visit www.investmentpress.net you will find a lot of useful articles about investment there.

There are many reasons why rare coins are better then stocks. But, I have found and pinpointed the top two reasons why rare coins are better. I feel that investing is useless if there is no potential in the investment. But many investments that have potential are usually riskier then other investments. So, even if an investment had potential, it may not be worth it if it was too volatile. This is where rare coin investments steps into the picture.

The first reason why coins are better then stocks is because of stability. There are many investment vehicles out there that can yield some hefty returns. But with all investments, the investor/investment manager has to weed out all the bad investments. They have to cut off as much risk as possible. If we look at coins, we can see that it is a very stable investment. Coins are not as volatile as stocks. It doesn’t go up and down by the minute. Its’ movements are a lot slower then stocks, but their movements are very predictable. The predictability is what makes it more stable. Because we know when it goes up and down, we can make confident decisions without risk or heavy losses. I don’t think we can find any other investment that is more stable then coins.

There is an inverse relationship between risk and returns. The returns tend to be lower when you cut off the risks. Some of the safest investments aren’t really worth it anymore because of their low returns. To counter this, investors usually diversify their portfolios. This allows them to cut off risk while improving their returns. But, with stocks, you have to buy enough of each stock to profit. And, you have to buy a lot of many different stocks to diversify. This is extremely costly and messy. With coins, you can buy just about any investment coin you like. You can easily diversify your portfolio by buying a different coin specimen each time you buy a coin. Your returns are never cut short, and you never lay too many eggs in one basket.

The second reason why coins are better then stocks is potential. The right coin never stops going up in value. This has been proven (so far) in historical coin reports. It’s not like stocks where they can stop going up in value. And then the company has to split their stocks so that it can continually go up in value. But, if the CEO doesn’t know when to do this, or does this at the wrong time, the stock may never make anymore sizeable gains. Furthermore, regardless if the stock splits or not, it doesn’t mean that the stock will continually rise in value. The stock can easily go down in value because of bad or false news. And after this, the stock may take forever to recover. Or worse yet, it may never recover at all. Coins on the other hand, can never lose their value because of bad news. Their performance depends mainly on supply and demand. And with the ever diminishing supply, some coins never see a down turn because of weakened demand. At the very most, they might stay stagnant for a short period of time. They will continue to rise again after demand strengthens.

The unique characteristics of rare coins makes it the perfect investment. Furthermore, I don’t think there is any other investment that can be diversified any further then coins. You could buy one example of each investment coin and never run out of coins to buy. It’s ultra safe, it yields extremely high returns, and its’ diversification easiness makes it an investor’s dream. If you have not looked into coins before, now is the time to do so.

To learn more about rare coin investments, please visit http://coinprofits.com

We have all been taught about the merits of diversification in investments. It is a variation of the old adage, “Don’t put all your eggs in one basket.”

Indeed, professional investment managers are trained to develop portfolios according to the tenets of Modern Portfolio Theory (MPT). MPT traces its roots to the work of Harry Markowitz and his seminal writings on “Portfolio Selection.” In his pioneering research, Markowitz was able to demonstrate the mathematical basis for diversification.

Essentially, Markowitz showed that selecting assets that have a positive expected return but exhibit low or (preferably) negative correlation to one another produces a combined portfolio that retains the positive expected return properties, but with lowered risk (as defined by variance).

Theoretically, this result arises due to the presence of at least two major sources of risk: nonsystematic (or unique) risk and systematic (or market) risk. While it is very difficult to eliminate market risk, it is possible to reduce the risks associated with unique investment assets. By combining investment assets that are subject to certain specific, unique risks with other investment assets that are subject to other unique risks, it may be possible to reduce the overall risk of the combined portfolio.

For the past several decades, this has been the mantra to which all investment managers adhered. Unfortunately, recent experiences in the capital markets have led both academics and professional investment practitioners to rethink portfolio construction. With the increasing interconnectedness of global markets and investment pools, we have seen that correlation structures among various investment assets are not always stable.

In fact, assets that typically exhibit low correlation with one another can dramatically change direction and begin exhibiting increased correlation during periods of market distress. The increased correlation leads to a reduction in the power of diversification and thus to increased risk in the overall portfolio. Unfortunately, this upward shift in correlation happens at exactly the time when an investor needs correlation the most: market distress.

As a result, investment managers need to be exceedingly careful in constructing portfolios that are able to withstand the dynamic nature of correlations, especially as the market experiences large disturbances. These “disturbances” are becoming much more commonplace: the Asian currency crisis of 1997, failure of the major hedge fund “Long Term Capital Management” in 1998, the burst of the “dot-com” bubble in 2000/2001, the terrorist attacks of 2001, the burst of the real estate bubble in 2007/2008, and the credit crisis of 2008/2009. In nearly every case, correlation structures among various assets increased at precisely the time when investors needed protection the most.

The best portfolio construction techniques have an appreciation for the fact that correlation structures may change during different “states of the world” or regimes. By incorporating these state-dependent correlation structures into portfolio design and optimization, investment managers can move to better protect portfolios during times of market distress.

Sharath M. Sury – Founder and Executive Director of the Sury Initiative for Financial Innovation & Risk Management (SIFIRM) at Santa Clara University, Sharath Sury devotes his time and energy to bringing together thought leaders who can address the development of real-world solutions to the current economic climate. Sharath Sury has worked with some of the brightest and most experienced experts in finance and risk management and aims to bring a greater sense of ethics and responsibility to his profession. Through his efforts, Professor Sury has established this invaluable forum for the research and discussion of new developments in the world of economics and finance and has attracted a renewed spirit of innovation to the industry. Sharath Sury also serves as an Adjunct Professor of Economics at the University of California and Adjunct Professor of Finance at DePaul University in Chicago. Sharath Sury’s interest and experience in wealth management began as an Associate and later Vice President at Goldman, Sachs & Co. He later founded and worked at S4 Capital, where he earned numerous accolades for his work.

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