Investment Strategy Business Research Paper Example | Topics and Well Written Essays - 1250 words

Investment Strategy Business - Research Paper Example whole meal flours investment dodge, as established in his now seminal text the Intelligent Investor, encourages a staunch and conservative approach referred to as defensive investing. This strategy is contrasted with speculative investing, an approach more about linked to gambling. grahams strategy has lasted the test of time and drawn positive attention from billionaire investor rabbit warren Buffet who claims it is the best investing text ever written. This essay examines Grahams strategy in this text through an analysis of investment objectives, asset allocation, security selection process, and whether I would implement this strategy. Objectives The strategies supply in the Intelligent Investor are such that any sort of investor including an individual, hedge fund, or pension envision can adopt them. This is due to Grahams deep understanding of market vicissitudes that make this strategy not simply a strategic angle on the market, but virtually the only unafraid approach to investment. In these regards, the only investors that this approach is not targeted for are what Graham terms speculative investors. Graham states, every nonprofessional who operates on margin should recognize ipso facto that he is speculatingeveryone who buys a so-called hot super C-stock returnis either speculating or gambling (Graham, pg. 21). ... Instead Grahams encourages a steady and conservative approach, the returns of which allow be determined by the peculiar(prenominal) market conditions of the era. Graham indicates that strategic approaches that guarantee a specific return may be successful for a period, but in the long run wee consistently proved ineffective. In terms of risk, Graham indicates that risk should be determined by the investors specific goals. For Graham risk is largely measured in the allocation of common stocks vs. bonds. Rather than implementing a time limit, Graham instead considers that risk and return are most concentrated in common stocks and as such they necessitate longer time horizons. One such example Graham gives is that a couple that are saving to buy a home would be better served consolidating their portfolio in bonds as this are safe and easily accessible conversely, an individual with a longer time horizon should conduct a higher percentage of common stock. Asset Allocation Grahams strategy as articulated in the Intelligent Investor functions as a comprehensive approach to portfolio management. Indeed, intrinsic to Grahams strategy is the mitigation of risk through the successful allocation of bonds and common stocks. There are a number of considerations within this mode of understanding. In regards to precious metals, Graham recommends a relatively small allocation of such securities, indicating 2-3% of a portfolio should be dedicated to them. In terms of determining the percentage of bonds vs. stocks in the portfolio Graham provides a variety of options. Grah am begins in considering a base percentage differential of 50% bonds and 50% stocks.