How Investment Projects Can Prevent Losses through Consulting Investment Advising Agencies - Research Paper Example

Introduction The sustainable investment strategy being analysed is limiting losses on the investment project an entrepreneur gets engaged in. In any investment undertakings, an investor’s main concern is minimising the profit losses rather than minimising the profit gains The key solution to take in order to minimise profit losses in an investment engagement is to make wise decisions when making major decisions as an investor, Limit Losses (Anon., 2009). Ideally, profit losses are avoided if the investor makes the wise significant decision on an investment engagement as early as within the first few years of the investment’s existence, Limit Losses (Anon., 2009). This situation is true as evident in the Dow Jones stock market, Limit Losses (Anon., 2009). As early as the first few years of its existence in the 1800’s, authorities in charge of its management have taken the wise decision in resolving the dilemmas the stock market encounters, Limit Losses (Anon., 2009). As a result, this action has helped prevent any severe complications the stock market may acquire in later years, Limit Losses (Anon., 2009). It has helped top authorities in charge of managing the Dow Jones stock market to consult with the most reputable and competent consultants in order to make the best intelligent decisions in the initial years of the market’s existence, Limit Losses (Anon., 2009). Because of this, losses have been minimised significantly in the first few years and decades of its existence, Limit Losses (Anon., 2009). Sustainable investment is able to survive mainly due to the successful implementation of efforts of minimising losses. Without doing this, sustainable investment ceases to exist. The profits from sustainable investment engagement must be avoided in being placed in tremendously risky conditions. The more profits are managed in risky methods, the more they are prone to gain significant losses. Therefore, most investors think long and hard before they make any major investment decisions. The investment is defined as sustainable due to the following reasons: -Minimising losses means strengthening the investment undertaking’s reputation in the market. People are able to trust an undertaking all the more if they are aware the undertaking’s management is diligent and competent enough to make the most feasible decisions when administrating the investment’s activities. -Good consultation with numerous specialists before making any decisions in the investment project entails low risks of failure in being successful in attaining investment goals. Most people are aware that two heads are better than one. Therefore, any helpful tips an investor can receive from highly experienced and knowledgeable individuals would definitely help in some ways of the investment project’s success in the market. -Limiting losses that produce considerable profits entail the opportunities for investors to make good use of extra profits in ways other than spending them for purposes that are of the investor’s choices. With the intention of gaining more profits, profits gained may be spent on the following implementation of the features of the investment projects: -Advertisements of the investment projects in televisions, radios, internet, newspapers, magazines, etc. -Hiring qualified individuals to become spokespeople for the investment project. By doing so, more people would be able to put their trust on the investment project. They would be able to become willing to take the risk when putting their trust on the project. They would realise that a reputable individual trusting the project more likely means the project is managed by reputable and competent professionals. The ESG factors relevant to this sustainable investment are the following: -There are certain ESG issues that are not naturally fixedly quantifiable, Integrating ESG Factors Into The Decision Making Process, (Anon., 2010). If these issues are pertinent to be interpreted in order to limit losses, analysts run into the high risks of making inaccurate interpretation results. They have the tendency to make this mistake due to the issues mentioned not having the ability to have fixed quantifiable data. Approximation of numerical figures either lead analysts to correct own mindset’s approximation, or they may erroneously come up with data that is far from the actual data existing. -The dilemma in effectively using the The Discounted Cash Flow (DCF) in the undertaking of the sustainable investment, Integrating ESG Factors Into The Decision Making Process (Anon., 2010). Most of the time, the investors make an error in using this system as when they deduct the amount of funds they invest in the project, they run the risk of producing under rated quality of investment features that they lose considerable profits. Investors need to be able to consult numerous specialists before utilising the DCF system to make sure they find a way to implement the most viable investment features even should they decide to lower the amount of funds to spend on such features. Most of the time, investors are not capable of coming up with innovative ideas in order to make minimal investment amounts, and at the same time, yield optimal investment features. Investors likewise need to make sure they consult specialists they can rely on for accurate knowledge and wisdom. At times, investors make the mistake of consulting the wrong person. Therefore, they end up losing the profits they hate to lose. Survey of Previous Research and Literature Limitation of losses is achieved through the usage of this system through the following methods, Our Strategy (Anon., 2010): -Through taking actions basing on the current trends which are successes in the market, investors are able to take on the opportunities of earning considerably what they need to earn, Our Strategy (Anon., 2010). In return, when the time comes that downsides in the market occurs, investors do not lose numerous profits as the profits mentioned are able to compensate for such losses, Our Strategy (Anon., 2010). -The system’s trading regulations are able to study the market breadths, as well as holding or potential holding’s rate as compared to predicted moving average prices, Our Strategy (Anon., 2010). -The system’s technical features have the capability of making it known to public the potential investment that lies within the project, Our Strategy (Anon., 2010). . By doing so, investors gain capability of having the knowledge on the actual situational components having effects on price modifications, Our Strategy (Anon., 2010). . -This system prevents any decision making that is based on emotionally and suspiciously based decision making, Our Strategy (Anon., 2010). . This system also bears the capability of preventing considerable losses to be further attained by limiting losses as soon as they see them coming, Our Strategy (Anon., 2010). . Sustainable investment investors are able to likewise limit losses through the assessment of exchange traded funds. The steps involved in the assessment of exchange traded funds are the following, How We Screen ETSs (Anon., 2010): “-Fees- We look at fees for the fund relative to similar funds.  Obviously, the lower the fees the better but fee is not the only selection criteria. -Total assets in the fund-We look for funds with over $50 million in assets.  Anything less than $50 million is probably not profitable to the company behind the ETF and therefore the ETF may not be around long. -Percentage assets in the top ten holdings- This is important for a diversification standpoint.  The lower the percent, the better.  There are some funds though that cannot keep the number low because they have limited holdings but these are typically very specialized funds. -Index Style- Not all indexes are the same.  We tend to prefer ETFs that follow passive indexes versus actively managed ETFs.  Our preference for passive indexes is due to our belief that active managers tend not to out perform their benchmarks and charge higher fees for such under performance. -Returns- We look at each fund’s performance not only relative to other funds in the category but how well each fund has performed in up and down markets.  More weight is given to a fund that out performs in down markets. -Tracking Error- How closely a fund tracks its respective index is very important”, How We Screen ETFs (Anon., 2010). The Claymore 1-5 year laddered corporate bond ETF yielded a high of 20.600 versus a low of 20.550 CBO:CN Claymore 1-5 Year Laddered Corporate Bond ETF (Anon., 2010). The definition of the Claymore 1-5 year Laddered Corporate Bond ETF is as follows: “The Claymore 1-5 Yr Laddered Corporate Bond ETF seeks to provide a return based on the price and performance, before fees and expenses, of the DEX 1-5 Yr Corporate Bond Index ("the Index"). The investment strategy of the fund is to invest in and hold the constituent securities of the index” ,Claymore 1-5 Year Laddered Corporate Bond ETF (Anon., 2010). These people mostly are able to limit losses by incorporating together their educational and work experience background knowledge and encounters when making decisions whether or not they would purchase particular exchange traded funds. The knowledge and encounters they gained from their education and work experience mostly have gained proven tracks of success in the past. Because of this, they become confident they are competent enough in successful limiting losses after purchasing Exchange-traded funds. Institutional investors likewise gain more trust in the population due to the reputable background and experience they have in their belts. The public knows these investors will not able to likely gain such prestige positions in the industry if their competence and professionalism have not been proven and tested yet. Proposed Research Question Things I am going to analyse and research pertaining to sustainable investment: -Ways in which investment projects are able to prevent losses through consulting investment advising agencies. -The rate of success investment projects achieve when avoiding losses. Reasons to analyse and research such things pertaining to sustainable investment: -Most investment managers try to resolve dilemmas they have regarding their investment projects through having consultation sessions with specialists. It is encouraged investors try to find out how effective this strategy is. By being able to be aware of this, they would have more ability to advice any other potential investors of the feasibility of this strategy. By being able to have some knowledge the prevalence of success in limiting losses, investors would be able to suggest to their counterparts not successful in limiting such losses of the possible ways the mentioned investment projects are successful in limiting losses. Data Collection The data used as resources are the following: -Industry research reports online -Various agencies’ professional information. -Online encyclopedia information. -Insights of philosophers posted online in various web sites. The time period of the data I use are the following: -5 year interval The data is mostly based on observation on a yearly basis. However, there is data provided that was observed on a monthly or quarterly basis. The investor used this data as she thought using the most updated resources would better help her in numerous ways than using resources that are dated years or decades ago. Numerous situations may be different in the present time as compared to how they were in the past. A lot of situations which may change either for the best or for the worse mostly have significant impacts on situation existing in the present time. For example, any rise in inflation in certain countries may ultimately impact the economy of that country. Ultimately, if most prices of goods and services go up, people ultimately have more tendencies to suffer from poverty. Suffering from poverty in this case is unavoidable. If people spend more money, they become more prone to being stuck in poverty sooner or later, whether it is against their will or not. Mean: 20.600 + 20.550= 41.15/2= 20.58 STD: 20.58-20.550= 0.03 Skewness: 20.600-20.550= 0.05 Kurtosis: 20.600+20.550= 41.15 Research Methods Explanation of the methods, formulas and techniques that you are going to employ in the investment analysis: -Analysis of the current global market trends. By doing this, any specialist is capable of discerning whether or not any point of time is the right time to make the investment. Most of the time, any investment project does not become successful if the global market condition is not doing good. Any market condition in one part of the globe ultimately affects the market condition of the other countries. This is especially true when first world countries undergo negative market conditions. -Taking into consideration with seriousness the investor’s educational and/or professional backgrounds. Most of the time the previous experience and the actual knowledge the investors have reflect the way they run the investment project they engage in. There are times when this background does not have any effects on the way investors manage their projects. However, the risks of these components having potential effects on the way investors do their jobs still pose luminous possibilities of taking place. Most of the time, any previous professional records clearly predicts any future events which may come along. Because of this, just like employers screening out job applicants, specialists would have to base the success of investors on their previous performances. At times, the huge risk of trusting investors’ abilities too easily if these investors do not have previous proven tracks of success bears huge risks. If the investors are not successful in taking these risks, they risk losing a lot of money. Therefore, in order to prevent such incident from happening, it is always better for investors to make efforts to gain the much needed experience they need to gain before deciding to embark on an investing quest. -Use only resources in analyse investment that are written and published by reliable experts. It is difficult to easily trust resources not written by competent and reputable sources. Most likely, these sources would only yield false information and mislead the readers. There are individuals who easily believe the things they read or hear about without even giving the benefit of the doubt. If this happens, individuals suffer from believing false sources and not having the chances of hearing out information from accurate sources. Four sub-headings of the research methods: (i) Risk- -Making decisions on the investment projects on the basis of successful global markets may sometimes yield failure on the projects. This happens if the global markets suddenly take downturns in the industry just when the investment money is just placed on a project, not expecting these markets will suddenly take downturns. This unfortunate incident entails the investor to lose numerous amounts of money. This incident at times entails the investors to be placed in poverty or severe financial crisis. -There are still times that investors’ educational and professional backgrounds do not predict their success or failure in investment. There are numerous investors and entrepreneurs who did not have much education but are still able to become the most successful money maker individuals in the world. At times, screening out investors only on the basis of lacking enough education makes the investors lose out on huge opportunities to success in the industry. This is such the case as if investors do not gain the trust of the experts only on the basis of their lack of education, they fail to exhibit their actual potentials to succeed in the market. This is due to the experts being unable to see that creativity and innovativeness are mostly the viable characters in being successful investors nowadays. (ii) Return Investors prevent any downturns in the market if they are able to pattern their investment decisions on the current global markets. For example, if the decide not to invest on certain investment features due to the economies of a first world country not doing good, they prevent the risk of having their investment funds be affected as well of this negative incident. -Basing trust on the competence of investors on their professional and educational backgrounds lessen the risk of acquiring investment projects that would not have been ran effectively. It is not always that creativeness and innovativeness work in being able to become competent investors. It is still a constant scenario that investors rely on their knowledge and work experience in order to succeed in their professions. (iii) Correlation And Relationship With Other Assets -Global markets The performance of the global markets ultimately affects the economies of less leading countries in the world. -Educational and professional backgrounds of the investor -These background would ultimately affect the investment success or failure of a project. The more exposed an investor is in doing his job, his potentials for success becomes more apparent. Analysis The potentials to succeed in any investment projects require numerous cooperation and guidance from colleagues. Taking on the huge responsibility of investing on a project requires tremendous skills and expertise in order to prevent any failure and end up losing a huge amount of money. Investors are encouraged to be humble and be more accepting of this fact of life so they will have major chances of succeeding in their endeavors. This undertaking would be a continuous struggle in order to achieve the best goal one could ever achieve. However, with diligence and perseverance, the possibility of succeeding always looms large. The revenue profits versus revenue cost increase significantly as time goes by as evident in the Australian Sam site, AUSSI. For instance, in February 9, 2010, the total revenue was 1,512.57 Australian dollar versus 1197.18 Australian dollar revenue cost spent, AUSSI Values (Anon., 2010). However, on March 31, 2010, a very sharp contrast can be seen when the revenue profit jumped to 1670.52 Australian dollar from revenue cost of 1,308.16 Australian dollar, AUSSI Values (Anon., 2010). The risk involved in doing an investment project largely looms if the investor is not conscientiously making efforts to arrive at objective decisions pertinent to his project. On the other hand, the returns also loom large for investors who give sufficient concerns for the success of their project. The risks and returns involved in the project go hand in hand. When risks are low, the returns exhibit humongous potentials. Conclusion The limitations of the research is the researcher’s inability to conduct actual scenario observations on investment. If a researcher would be able to do that, a more accurate set of data can be yielded. The investment is marginal. Its success or failure would basically depend on the determination and perseverance of the investor. This paper tells investment enthusiasts that success in any investment undertaking involve dedication and efforts. The author seeks enthusiasts that initiative to be industrious and innovative are imperative factors in accomplishing a successful investment endeavor. Investors are advisable not to rely on luck alone when seeking success. They should have the determination and strong positive thinking when working through their goals. References: Sam Indexes GMbh. 2010. AUSSI Values (Updated 31 March 2010) [Online] Available at: http://www.aussi.net.au/htmle/index_values/index_values.html [Accessed 03 June 2010]. Bloomberg. 2010. CBO: CN Claymore 1-5 Year Laddered Corporate Bond ETF, s.d. [Online] Available at: http://www.bloomberg.com/apps/quote?ticker=CBO:CN [Accessed 03 June 2010]. Claymore. 2010. Claymore 1-5 Yr. Laddered Corporate Bond ETF, s.d. [Online] Available at: http://www.claymoreinvestments.ca/en/investment- options/exchange-traded-funds/fund-details/fund-summary?ticker=CBO [Acessed 03 June 2010]. Sustainable Investment Strategies. 2009.How We Screen ETF, s.d. [Online] Available at: http://sustainableinvestmentstrategies.com/investment- philosophy/etf/ [Accessed 03 June 2010]. Mercer, LLC. 2010. Integrating ESG Factors Into The Decision-Making Process, s.d. [Online] Available at: http://www.mercer.com/summary.htm?idContent=1324835 [Accessed 03 June 2010]. Sustainable Investment Strategies. 2009. Limiting Losses, s.d. [Online] Available at: sustainableinvestmentstrategies.com/investment-philosophy/limit-losses/ [Accessed 03 June 2010]. Sustainable Investment Strategies. 2009. Our Strategy, s.d. [Online] Available at: sustainableinvestmentstrategies.com/investment-philosophy/our-strategy [Accessed 03 June 2010]. Read More