Investment Losses

shruti asked:


The term asset management is often used to refer to the investment management of collective investments which usually includes investment funds, managed funds, mutual funds or any other funds etc. Financial market shows amazing moves. Asset management is must to get the control over finance and further investments. Sometimes it may be confusing to choose the best investment option as there various options available nowadays. To manage these investments and to plan further is again a confusing and hard task. Because without the asset management finance, you won’t get the actual picture of your overall investment and profit portfolio. With the help of proper asset management, you can develop your investment performance and manage financial risk exposure. Even it also helps to reduce the overall business cost which in turn benefits you to reduce the extra expenses.

Today, there are many finance companies available in the market that are specialized in asset management finance and they provide services to the customers which vary according to the type of assets, customer requirements, investment capacity and market conditions etc. Asset management finance system has developed from maintenance management system. Thus, it works out to all physical assets also such as property, heritage, infrastructure, plant and equipment. Generally, services offered by these companies also include liquidity, diversification, portfolio management and professional management service. They provide advices regarding issues like asset management and restructuring to corporations, mergers and acquisitions, partnerships, institutions and governments. The portfolio managers of an asset management finance company turn individual investment decisions into a fully diversified local, global or specialist portfolio. Such portfolios are with attractive risk-return characteristics.

Thus, get the help of asset management finance companies for your short-term or long-term investments. Proper asset management finance is the key to become a successful investor.

A stock is a share in the ownership of the company you have invested in. By owning an amount of stock, you will be paid dividend as and when the company declares. When you own a stock, you have the total control of this stock. You can sell it anytime if you think that you no longer intended to own it or you think that it is not worth to own it. You can also keep it for your whole life and use it as collateral to borrow money from bank or financial institution. Stock investments can be long-term or short-term investments.

A bond is a debt security which the bond issuer owns you if you have bought the bond and is obliged to pay interest or repay the principal at a later date. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure. Bonds are bought and traded mostly by institutions like pension funds, insurance companies and banks. Most individuals who want to own bonds do so through bond funds.

Though stock and bond are securities, there are some differences in their investment policies. Major difference is that stock investment gives you the share of ownership of the listed company whereas bond investment doesn’t give as bond holders are lenders to the issuers. Another difference between stock and bond investment is that bonds usually have a defined term or maturity after which the bond is redeemed. On the other hand stocks may be outstanding. Bond usually has contract type repayment schedule and once they have paid back all the money that you have lent to them, the bond will end. Once the expiration date has over, the whole investment will become worthless. On the other hand, the ownership of a stock can not be cancelled unless the company is declared bankrupt.

Thus, while choosing between stock and bond investment be aware of these facts and then decide the right investment policy for you.



ERIN

Alexander Chong asked:


Warren Buffett is the world famous stock market guru. Recently, he bought stakes of General Electric Co (GE) and Goldman Sachs Group. General Electric Co (GE) is a technology and services giant company which is listed in Dow Jones board; whereas, Goldman Sachs Group (GS) is a financial heavyweight company, which is listed in New York Security Exchange (NYSE). Through his famous investment company; Bershire Hathaway, Buffett invested US$8bil in these two companies. His action startled many people in stock market. When everybody was taking their money out from the Wall Street, he invested such a huge amount of money. There is no surprise actually because he at one time said that the best time to enter the market was when everybody was not interested in stocks. He also stated that it was difficult to buy a popular stocks and made profit from it. Besides, he also said that when everybody was in fear was the best time to enter the market but not when everybody was greedy. According to financial specialists, Buffett investment is a long term investment.

Currently, stock prices are considered as irrational due to the heavy sell down. So, now it is the best time to invest. When investing in a company, we should invest to the company management and market strategy. In this type of investment, good stocks should be held as long as possible by the investors.

When investing in stock market, Warren Buffett is very careful. He sets very strict requirements to select stocks. So, stocks that fulfill his requirements are seldom being found. Earnings versus growth, high return on equity, minimal debts, strength of management and simple business model are five main criteria, which are used by Buffett to select stocks to invest. He usually concentrates in a few solid stocks, which able to give high return of investment. These few stocks usually are in the industries that he understands the most. He is also very careful to the local bourse, which is an emerging market that could be very volatile. Besides, he is also watchful to the market sentiment, which could be easily affected by many other external factors.

Good stocks are worth to hold for as long as possible. This is because good stocks such as blue chip stocks are able to ride through bad times and recover over time. Buffett is the most successful and trusted investors. His investments in GE and Goldman Sachs will restore the confidence of some of the investor on the Wall Street. When Buffett invests in stocks, underlying fundamentals of a company are the must will be investigated by him rather than market sentiment. Because of his astute investment skill, he is dubbed as “The Oracle of Omaha”. Intrinsic value of a business is always will be determined by him and he is willing to pay a good price for it as long as the business has the intrinsic value. Buffett is very prudent and holds a principle that if he can not understand the operation of the business; he will not invest in it. That’s why, he escaped the dotcom market crash. He will check the fundamentals of the companies that he intends to invest by analyzing the companies’ annual reports. This is his simple investment principle.

He is the chairman of Berkshire Hathaway and this company’s stock is the most expensive on Wall Street. In a letter last year to his shareholders, he stated that Bershire was looking to invest to the companies, which had competitive advantage in a stable industry for long-term prospects. His philosophy is that the stock price will increase as long as the business does well. Investment in PetroChina, which is an oil and gas firm in China, was one of his most successful investments. He bought the stake for this company for an initial sum of US$500 mil and then sold it for US$3.5 bil. Investments in companies such as Coca-Cola, American Express and Gillette are also among his successful investments.



JOHN