{"product_id":"the-complete-guide-to-portfolio-construction-and-management-9781119976882","title":"The Complete Guide to Portfolio Construction and","description":"\u003cb\u003eBook Synopsis\u003c\/b\u003e\u003cbr\u003eIn the wake of the recent financial crisis, many will agree that it is time for a fresh approach to portfolio management.   The Complete Guide to Portfolio Construction and Management provides practical investment advice for building a robust, diversified portfolio.\u003cbr\u003e\u003cbr\u003e\u003cb\u003eTable of Contents\u003c\/b\u003e\u003cbr\u003e\u003cp\u003eForeword xiii\u003c\/p\u003e \u003cp\u003eAbout the Author xv\u003c\/p\u003e \u003cp\u003eAcknowledgements xvii\u003c\/p\u003e \u003cp\u003eIntroduction xix\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart I Investors and Risk 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e1 Basic Principles 3\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e1.1 Investors 3\u003c\/p\u003e \u003cp\u003e1.2 Inflation 3\u003c\/p\u003e \u003cp\u003e1.3 Choices for Investors in Terms of Investments 5\u003c\/p\u003e \u003cp\u003e\u003cb\u003e2 Measures of Risk 7\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e2.1 Volatility or Standard Deviation 7\u003c\/p\u003e \u003cp\u003e2.2 Beta as a Measure of Risk 11\u003c\/p\u003e \u003cp\u003e2.3 Value-at-Risk (VaR) 13\u003c\/p\u003e \u003cp\u003e2.4 Investor Behaviour Towards Risk 14\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart II Asset Classes and Their Degree of Risk 17\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e3 Asset Classes and Associated Risks 19\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e3.1 Money Market Investments 19\u003c\/p\u003e \u003cp\u003e3.1.1 Definition 19\u003c\/p\u003e \u003cp\u003e3.1.2 Risks associated with money market investments 20\u003c\/p\u003e \u003cp\u003e3.2 Bonds 22\u003c\/p\u003e \u003cp\u003e3.2.1 Definition 22\u003c\/p\u003e \u003cp\u003e3.2.2 Risks associated with bonds 26\u003c\/p\u003e \u003cp\u003e3.3 Stocks 33\u003c\/p\u003e \u003cp\u003e3.3.1 Definition 33\u003c\/p\u003e \u003cp\u003e3.3.2 Risks associated with stocks 36\u003c\/p\u003e \u003cp\u003e3.4 Real Estate 45\u003c\/p\u003e \u003cp\u003e3.4.1 Definition 45\u003c\/p\u003e \u003cp\u003e3.4.2 Risks associated with real estate 46\u003c\/p\u003e \u003cp\u003e3.5 Commodities and Metals 48\u003c\/p\u003e \u003cp\u003e3.5.1 Definition 48\u003c\/p\u003e \u003cp\u003e3.5.2 Risks associated with commodities and metals 51\u003c\/p\u003e \u003cp\u003e3.6 Private Equity 54\u003c\/p\u003e \u003cp\u003e3.6.1 Definition 54\u003c\/p\u003e \u003cp\u003e3.6.2 Risks associated with private equity 54\u003c\/p\u003e \u003cp\u003e3.7 Other Asset Classes 56\u003c\/p\u003e \u003cp\u003e\u003cb\u003e4 Particular Forms of Investment within Asset Classes 59\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e4.1 Hedge Funds 59\u003c\/p\u003e \u003cp\u003e4.1.1 Definition 59\u003c\/p\u003e \u003cp\u003e4.1.2 Risks associated with hedge funds 60\u003c\/p\u003e \u003cp\u003e4.2 Structured Products 63\u003c\/p\u003e \u003cp\u003e4.2.1 Definition 63\u003c\/p\u003e \u003cp\u003e4.2.2 Risks associated with structured products 64\u003c\/p\u003e \u003cp\u003e4.3 Options 65\u003c\/p\u003e \u003cp\u003e4.3.1 Definition 65\u003c\/p\u003e \u003cp\u003e4.3.2 Risks associated with options 66\u003c\/p\u003e \u003cp\u003e\u003cb\u003e5 Classification of Asset Classes According to their Degree of Risk 71\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e5.1 Selected Criteria for Classification of Asset Classes 71\u003c\/p\u003e \u003cp\u003e5.2 Classification of the Different Asset Classes 75\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart III the Market 77\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e6 Market Efficiency 79\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e6.1 Weak Form Market Efficiency 79\u003c\/p\u003e \u003cp\u003e6.2 Semi-strong Form Market Efficiency 80\u003c\/p\u003e \u003cp\u003e6.3 Strong Form Market Efficiency 80\u003c\/p\u003e \u003cp\u003e6.4 Conclusion on Market Efficiency 81\u003c\/p\u003e \u003cp\u003e\u003cb\u003e7 Fundamental Analysis 83\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e7.1 Discounted Cash Flow 83\u003c\/p\u003e \u003cp\u003e7.2 Relative Measures 85\u003c\/p\u003e \u003cp\u003e7.2.1 Price to Earnings Ratio (P\/E) 85\u003c\/p\u003e \u003cp\u003e7.2.2 Price to Book 85\u003c\/p\u003e \u003cp\u003e7.3 Strategic Analysis 86\u003c\/p\u003e \u003cp\u003e7.3.1 The business model 86\u003c\/p\u003e \u003cp\u003e7.3.2 External analysis 88\u003c\/p\u003e \u003cp\u003e7.3.3 Internal analysis 95\u003c\/p\u003e \u003cp\u003e7.3.4 The SWOT table (Strengths, Weaknesses, Opportunities and Threats) 97\u003c\/p\u003e \u003cp\u003e7.4 Criticism of Fundamental Analysis 98\u003c\/p\u003e \u003cp\u003e\u003cb\u003e8 Technical Analysis 101\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e8.1 The Three Fundamental Principles of Technical Analysis 101\u003c\/p\u003e \u003cp\u003e8.1.1 Prices reflect all available information 101\u003c\/p\u003e \u003cp\u003e8.1.2 Prices move in trends 102\u003c\/p\u003e \u003cp\u003e8.1.3 History repeats 104\u003c\/p\u003e \u003cp\u003e8.1.4 Criticism of technical analysis 105\u003c\/p\u003e \u003cp\u003e8.2 Conclusion on Technical Analysis 106\u003c\/p\u003e \u003cp\u003e\u003cb\u003e9 Investment Approach Based on “Psychological Principles” 109\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart IV Valuation of Financial Assets 111\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e10 Valuation of Money Market Investments 113\u003c\/p\u003e \u003cp\u003e11 Valuation of Bonds 115\u003c\/p\u003e \u003cp\u003e12 Valuation of Stocks 117\u003c\/p\u003e \u003cp\u003e13 Valuation of Options 119\u003c\/p\u003e \u003cp\u003e14 Valuation of Real Estate 121\u003c\/p\u003e \u003cp\u003e15 Valuation of Commodities and Metals 123\u003c\/p\u003e \u003cp\u003e16 Conclusion on Valuation 125\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart V Three Practical Approaches to Security Selection: Buffett, Graham and Lynch 127\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e17 Warren Buffett’s Value Investing Approach 129\u003c\/p\u003e \u003cp\u003e18 Benjamin Graham’s Approach 133\u003c\/p\u003e \u003cp\u003e18.1 The Defensive Investor 133\u003c\/p\u003e \u003cp\u003e18.2 The Enterprising Investor 134\u003c\/p\u003e \u003cp\u003e18.3 Security Analysis 135\u003c\/p\u003e \u003cp\u003e18.3.1 Bond selection 135\u003c\/p\u003e \u003cp\u003e18.3.2 Stock selection 135\u003c\/p\u003e \u003cp\u003e18.4 The Margin of Safety Concept 136\u003c\/p\u003e \u003cp\u003e\u003cb\u003e19 Peter Lynch’s Approach 137\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e19.1 Stock Categories 138\u003c\/p\u003e \u003cp\u003e19.1.1 Slow growers 138\u003c\/p\u003e \u003cp\u003e19.1.2 The stalwarts 138\u003c\/p\u003e \u003cp\u003e19.1.3 The fast growers 139\u003c\/p\u003e \u003cp\u003e19.1.4 Cyclicals 139\u003c\/p\u003e \u003cp\u003e19.1.5 Turnarounds 140\u003c\/p\u003e \u003cp\u003e19.1.6 The asset plays 140\u003c\/p\u003e \u003cp\u003e19.2 The Perfect Company According to Lynch 140\u003c\/p\u003e \u003cp\u003e19.3 Earnings and Earnings Growth 143\u003c\/p\u003e \u003cp\u003e19.4 Selection Criteria 144\u003c\/p\u003e \u003cp\u003e19.4.1 The sales percentage 144\u003c\/p\u003e \u003cp\u003e19.4.2 The P\/E ratio 145\u003c\/p\u003e \u003cp\u003e19.4.3 Liquid assets 145\u003c\/p\u003e \u003cp\u003e19.4.4 Debt 145\u003c\/p\u003e \u003cp\u003e19.4.5 Dividends 146\u003c\/p\u003e \u003cp\u003e19.4.6 Hidden assets 146\u003c\/p\u003e \u003cp\u003e19.4.7 Cash flow 146\u003c\/p\u003e \u003cp\u003e19.4.8 Inventories 146\u003c\/p\u003e \u003cp\u003e19.4.9 Growth rate 146\u003c\/p\u003e \u003cp\u003e19.4.10 Gross profits 146\u003c\/p\u003e \u003cp\u003e19.5 Conclusion on Peter Lynch’s Approach 147\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart VI Behavioural Finance 149\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e20 Investors in Behavioural Finance 151\u003c\/p\u003e \u003cp\u003e21 Heuristics and Cognitive Biases 153\u003c\/p\u003e \u003cp\u003e21.1 Information Selection 153\u003c\/p\u003e \u003cp\u003e21.1.1 Availability heuristic 153\u003c\/p\u003e \u003cp\u003e21.1.2 Herding 153\u003c\/p\u003e \u003cp\u003e21.1.3 Ambiguity aversion 154\u003c\/p\u003e \u003cp\u003e21.1.4 Wishful thinking 154\u003c\/p\u003e \u003cp\u003e21.2 Information Processing 154\u003c\/p\u003e \u003cp\u003e21.2.1 Representation bias 154\u003c\/p\u003e \u003cp\u003e21.2.2 Confirmation bias 154\u003c\/p\u003e \u003cp\u003e21.2.3 Narrative fallacy 155\u003c\/p\u003e \u003cp\u003e21.2.4 Gambler’s fallacy 155\u003c\/p\u003e \u003cp\u003e21.2.5 Anchoring 155\u003c\/p\u003e \u003cp\u003e21.2.6 Framing 155\u003c\/p\u003e \u003cp\u003e21.2.7 Probability matching 155\u003c\/p\u003e \u003cp\u003e21.2.8 Wearing blinkers 156\u003c\/p\u003e \u003cp\u003e21.2.9 Overconfidence bias 156\u003c\/p\u003e \u003cp\u003e21.2.10 Illusion of control 157\u003c\/p\u003e \u003cp\u003e21.3 The Use of Assets 157\u003c\/p\u003e \u003cp\u003e21.3.1 Mental accounting 157\u003c\/p\u003e \u003cp\u003e21.3.2 Disposition effect 158\u003c\/p\u003e \u003cp\u003e21.3.3 House money effect 158\u003c\/p\u003e \u003cp\u003e21.3.4 Endowment effect 158\u003c\/p\u003e \u003cp\u003e21.3.5 Home bias 158\u003c\/p\u003e \u003cp\u003e21.3.6 No go’s 158\u003c\/p\u003e \u003cp\u003e21.3.7 Sunk costs 158\u003c\/p\u003e \u003cp\u003e21.3.8 Lack of control 159\u003c\/p\u003e \u003cp\u003e21.3.9 Pride and regret 159\u003c\/p\u003e \u003cp\u003e\u003cb\u003e22 Investment Approach Based on Behavioural Finance 161\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e22.1 Momentum Strategy 161\u003c\/p\u003e \u003cp\u003e\u003cb\u003e23 Criticism of Behavioural Finance 165\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart VII Forecasting Market Movements 167\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e24 Investment Approach Based on Probabilities 169\u003c\/p\u003e \u003cp\u003e25 Random Walk Theory 171\u003c\/p\u003e \u003cp\u003e26 Market Timing 173\u003c\/p\u003e \u003cp\u003e27 Macroeconomic Investment Approach 177\u003c\/p\u003e \u003cp\u003e27.1 State Interventions 179\u003c\/p\u003e \u003cp\u003e27.1.1 Tax and fiscal policy 180\u003c\/p\u003e \u003cp\u003e27.1.2 Monetary policy 181\u003c\/p\u003e \u003cp\u003e27.1.3 The appropriate policy 181\u003c\/p\u003e \u003cp\u003e27.2 The Major Macroeconomic Forces 182\u003c\/p\u003e \u003cp\u003e27.2.1 Inflation 182\u003c\/p\u003e \u003cp\u003e27.2.2 Economic growth 185\u003c\/p\u003e \u003cp\u003e27.2.3 Recession 192\u003c\/p\u003e \u003cp\u003e27.2.4 Productivity and technological change 195\u003c\/p\u003e \u003cp\u003e27.2.5 Regulations and taxes 197\u003c\/p\u003e \u003cp\u003e27.3 Sectorial Analysis 197\u003c\/p\u003e \u003cp\u003e27.4 Peter Navarro’s Approach 198\u003c\/p\u003e \u003cp\u003e27.4.1 Trends and stock picking 199\u003c\/p\u003e \u003cp\u003e27.4.2 Sector rotation 200\u003c\/p\u003e \u003cp\u003e27.5 Criticism of the Macroeconomic Approach 202\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart VIII Modelling Market Movements 203\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e28 Suggested Investment Approach 207\u003c\/p\u003e \u003cp\u003e29 The Forces 209\u003c\/p\u003e \u003cp\u003e29.1 The Macroeconomic Force 209\u003c\/p\u003e \u003cp\u003e29.2 The Fundamental Force 209\u003c\/p\u003e \u003cp\u003e29.3 The Technical Force 209\u003c\/p\u003e \u003cp\u003e29.4 The Behavioural Force 210\u003c\/p\u003e \u003cp\u003e29.5 The Luck Force 210\u003c\/p\u003e \u003cp\u003e30 The Forces’ Strength 211\u003c\/p\u003e \u003cp\u003e31 The Beauty of the Approach 213\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart IX Portfolio Construction and Management 215\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e32 Modern Portfolio Theory According to Markowitz 217\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e32.1 David Swensen’s Approach 219\u003c\/p\u003e \u003cp\u003e33 The Capital Asset Pricing Model (CAPM) 221\u003c\/p\u003e \u003cp\u003e34 The Minimum Variance Portfolio 223\u003c\/p\u003e \u003cp\u003e35 Value-at-Risk (VaR) 227\u003c\/p\u003e \u003cp\u003e36 Discretionary Mandates 229\u003c\/p\u003e \u003cp\u003e37 The Dollar-cost Averaging Approach 231\u003c\/p\u003e \u003cp\u003e38 Our Portfolio Construction Method 233\u003c\/p\u003e \u003cp\u003e38.1 Basic Principles of Portfolio Construction 233\u003c\/p\u003e \u003cp\u003e38.1.1 10 rules for protecting your capital 234\u003c\/p\u003e \u003cp\u003e38.1.2 The 12 rules of risk management 235\u003c\/p\u003e \u003cp\u003e38.2 The Portfolio Construction Process 238\u003c\/p\u003e \u003cp\u003e38.2.1 The investor’s life objectives 238\u003c\/p\u003e \u003cp\u003e38.2.2 The investor’s life cycle and investment time horizon 238\u003c\/p\u003e \u003cp\u003e38.2.3 Choosing a reference currency 238\u003c\/p\u003e \u003cp\u003e38.2.4 Evaluating the risk profile 238\u003c\/p\u003e \u003cp\u003e38.2.5 Estimating a return target 239\u003c\/p\u003e \u003cp\u003e38.2.6 The investor’s tax rate 240\u003c\/p\u003e \u003cp\u003e38.2.7 Determining the proportion of risky assets 240\u003c\/p\u003e \u003cp\u003e38.2.8 Evaluating the expected degree of liquidity (share of illiquid assets) 240\u003c\/p\u003e \u003cp\u003e38.2.9 Portfolio construction and management 240\u003c\/p\u003e \u003cp\u003e38.3 A Practical Example of Portfolio Construction 249\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart X Attractiveness of the Different Asset Classes 253\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e39 Asset Classes 255\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e39.1 Money Market Investments 255\u003c\/p\u003e \u003cp\u003e39.2 Bonds 255\u003c\/p\u003e \u003cp\u003e39.3 Stocks 256\u003c\/p\u003e \u003cp\u003e39.4 Real Estate 257\u003c\/p\u003e \u003cp\u003e39.5 Commodities and Precious and Industrial Metals 258\u003c\/p\u003e \u003cp\u003e\u003cb\u003e40 The Four Forces of the Investment Model 259\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e40.1 The Macroeconomic Force 259\u003c\/p\u003e \u003cp\u003e40.1.1 The Macroeconomic Force and money market investments 259\u003c\/p\u003e \u003cp\u003e40.1.2 The Macroeconomic Force and bonds 259\u003c\/p\u003e \u003cp\u003e40.1.3 The Macroeconomic Force and stocks 260\u003c\/p\u003e \u003cp\u003e40.1.4 The Macroeconomic Force and real estate 261\u003c\/p\u003e \u003cp\u003e40.1.5 The Macroeconomic Force and commodities, precious and industrial metals 262\u003c\/p\u003e \u003cp\u003e40.2 The Fundamental Force 262\u003c\/p\u003e \u003cp\u003e40.2.1 The Fundamental Force and money market investments 262\u003c\/p\u003e \u003cp\u003e40.2.2 The Fundamental Force and bonds 263\u003c\/p\u003e \u003cp\u003e40.2.3 The Fundamental Force and stocks 263\u003c\/p\u003e \u003cp\u003e40.2.4 The Fundamental Force and real estate 269\u003c\/p\u003e \u003cp\u003e40.2.5 The Fundamental Force and commodities, precious and industrial metals 269\u003c\/p\u003e \u003cp\u003e40.3 The Technical Force 269\u003c\/p\u003e \u003cp\u003e40.3.1 The Technical Force and money market investments 269\u003c\/p\u003e \u003cp\u003e40.3.2 The Technical Force and bonds 270\u003c\/p\u003e \u003cp\u003e40.3.3 The Technical Force and stocks 270\u003c\/p\u003e \u003cp\u003e40.3.4 The Technical Force and real estate 270\u003c\/p\u003e \u003cp\u003e40.3.5 The Technical Force and commodities, precious and industrial metals 271\u003c\/p\u003e \u003cp\u003e40.4 The Behavioural Force 271\u003c\/p\u003e \u003cp\u003e40.4.1 The Behavioural Force and money market investments 271\u003c\/p\u003e \u003cp\u003e40.4.2 The Behavioural Force and bonds 271\u003c\/p\u003e \u003cp\u003e40.4.3 The Behavioural Force and stocks 271\u003c\/p\u003e \u003cp\u003e40.4.4 The Behavioural Force and real estate 272\u003c\/p\u003e \u003cp\u003e40.4.5 The Behavioural Force and commodities, precious and industrial metals 272\u003c\/p\u003e \u003cp\u003e41 Table Summarising the Different Forces 273\u003c\/p\u003e \u003cp\u003e42 A Final Example: Analysis of the Subprime Crisis 277\u003c\/p\u003e \u003cp\u003eConclusion 281\u003c\/p\u003e \u003cp\u003eBibliography 283\u003c\/p\u003e \u003cp\u003eIndex 285 \u003c\/p\u003e","brand":"John Wiley \u0026 Sons Inc","offers":[{"title":"Default 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