Why or why not? (1 to 2 paragraphs) 1) How individual investors make investment decisions in practice rather than in theory; and How investors manage their funds/savings/ investments in light of current stock markets.
Why? I think in large regard, and granted this is just my opinion, that most investors prefer for their respective portfolio manager to be with the organization for a good period.
Some investors invest for longer term goals such as kid's education whereas some investors are looking to make quick bucks in the market. Hence, portfolio has to be constructed as per the investment horizon of the investor.
Do you think investors that go to this length usually will end up with a strong portfolio with high returns? Why or why not?
According to the investment theory, the investors are risk averse. Therefore, they want to make a portfolio which has minimum risk (Brentani, 2004).
Portfolio Theory Risk. What is portfolio theory and why is it important to investing behavior? 250 words 5. Sources of Risk.
For achieving this purpose, the investors spread their risk by using diversify security portfolio. But some investors do not believe on this approach.
Such investors are also known as value investors who act differently from the usual retail investors.
Such investors are also known as value investors who act differently from the usual retail investors.
This is the single reason why financial advisors seek to have a diversified portfolio. The risk of the portfolio is simply a weighted average of the expected risk of each individual asset in the portfolio.