Risk and return strategies

Risk and return strategies Portfolio management is principally about risk and return strategies. Introduction Portfolio management is principally about risk and return strategies. Portfolio management is concerned with the construction and management of investment assets. There are two principal school of portfolio management: passive and active. A passive and active term refers to the method by which the assets are selected for inclusion into the portfolio. A passive portfolio includes the market portfolio; consist of shares in all companies quoted on the stock exchange, or a selection of group of stock e.g. all technology stocks. Passive portfolio therefore does not make any attempt to research each stock and decide if it should be included or excluded from the portfolio. There is no technical or fundamental analysis carried out in order to beat the market portfolio. Passive equity portfolio management is all about long-term buy and hold strategy, usually tracking an index over time. This is designed to match the market portfolio performance. Active portfolio management on the other hand uses research, analysis (both fundamental and technical), economic factors and also an element of subjective judgement in selecting stock into the portfolio. It is believed that the stocks are undervalued and will out perform the market portfolio in the future. Planning The planning stage of portfolio management involves a written investment policy statement. A clearly defined investment policy that includes the preferred management technique, hence, active or passive indexed portfolio management. It also outlines the portfolio goals; level of returns and defined risk tolerances for the portfolio. The planning also involves rebalancing strategies and means of effective internal and external communication of those goals. Asset Analysis Aside from inside knowledge asset selection advice is based on two principal types of investment analysis: technical analysis and fundamental analysis. Technical analysis is based on studying past trends in share prices in the belief that patterns can be discerned in their movements which can be used to predict future movements. This uses graphs of historical share price variations and it is often referred to as â€Å"chartists† analysis. Fundamental analysis concentrates on the study of the underlying position of the company. Such details as its strengths and weaknesses and future opportunities and threats, also uses ratio analysis in evaluating a particular stock. Asset Selection and Combination Stock selection as part of Active portfolio management has very limited impact on the return investors earn, as a result of stock markets being efficient. The efficient markets hypothesis (EMH) holds that a stock market is efficient if the market price of a company’s share quickly and correctly reflects all relevant information as it becomes available (Lumby, S., Jones, C., (2004)). In asset selection and combination we need to remember that investors are risk-adverse and select their portfolios by the mean/variance criteria (i.e. they are markowitz efficient investors). However, asset combination does result in an increase portfolio returns as a result of how the investment are combined and allocated within the available asset classes. The combination of stocks vs. bonds vs. cash, large companies very smaller ones, UK companies vs. overseas stocks and value companies vs. growth companies. Evaluation of Performance Portfolio performance evaluation involves return measurement (weight average return) over several periods. Performance measures such as market timing and security analysis. Style analysis is used to describe a portfolio by evaluating how its returns act, rather than by using a simplistic concept of what the portfolio included. Its objective is also to provide a superior mean of performance measurement for stocks and also the skills of the fund manager. Style analysis uses an asset class factor model: Ri = bi1Fi1+bi2Fi2+ †¦ + binFin+ei Where Fi1 †¦ Fin are return factors and bi1 †¦Ã‚   bni are sensitivities to the factors. All factors are return factors to the portfolio. The factors used in the portfolio are stock index, bonds, value stock, growth stock etc. There are many ways to evaluate the performance of a portfolio, style analysis is one of the newest techniques and it allows us to explain how portfolio returns behave. It is also a useful mean of stock selection for the portfolio.   Re Balancing Rebalancing the portfolio is critical for the financial future. Rebalancing involves buying low and selling high. This process ensures that the portfolio is in line with the initial portfolio asset allocation plan. As the economic conditions change some assets within the portfolio will appreciate faster then others and their weighting within the portfolio will change from the initial allocation plan. This will result in an out of balance portfolio and will need rebalancing by selling high performing stock and buying low performing ones. Indexing – Advantages and Disadvantages As the stock markets are efficient there are various advantages in index funds over actively managed funds as a portfolio management method. EMH theory states that security markets are extremely efficient in processing individual stock information; so undervalued shares are difficult to consistently identify and purchase. Another advantage is the lower expenses in managing an index fund over an active fund. Also lower trading costs versus actively managed funds where stocks are typically traded more frequently and finally, lower capital gains taxes resulting from shares being sold less often. Disadvantages of indexing are in terms of tracking error suffered as a result of changing economic climax where certain stock will out perform expectations. This could result in the portfolio becoming out of balance and rebalancing results in transaction costs and subsequent errors in tracking the underlying index. Active Portfolio Management An Active investor is one that is not passive. Active portfolio manager’s portfolio will differ from that of a passive manager. This is due to that fact that active managers will act on perception of mispricing in stock market, and as such perceptions change frequently, such managers tend to trade frequently, hence, the term ‘active’. Efficient Market Hypothesis would disagree that such mispricing exist in the market and that the stock market is efficient. Therefore, active portfolio manager’s returns are lower then that of passive managers, due to the increase cost of actively managing the portfolio. If the markets are semi-strong or strong form efficient then active portfolio management in terms of fundamental or technical analysis are waste of time as they will not provide a potential gains in discovering the undervalued stocks. Only if the market were weak form efficient than it would permit fundamental analysis to uncover potential gains. Therefore, active portfolio management is an unrewarding exercise and can lead to waste of both effort and money. Passive vs. Active There are various advantages of passive portfolio management over that of active. We have already discussed the EMH and how that would suggest that active management has very little value in terms of portfolio selection in a semi-strong form of market efficiency.   So passive portfolio management costs much less than active management. This give passive investors an increase net returns as the management costs are lower. Passive portfolios are also more tax efficient with their ‘buy and hold forever’ approach result in low income tax costs. Active portfolio often attracts capital gains tax from sell of short-term appreciated gains in stocks. Passive mutual funds have a inherently low turnover of securities and thus are exposed to fewer realised capital gains. Passive portfolios have predictable styles. A passive investor knows exactly what types of securities he or she is invested in. Active managers, on the other hand, can vary the composition of their portfolios significantly over time a problem known as style drift. Conclusion Actively managed portfolio will try to deliver excess returns over the passive portfolio by actively forecasting future returns on individual stocks. However, in reality they do not obtain significant excess return of the market portfolio, which is the primary indexing for the passive portfolio management.  Ã‚   This is in accordance with the efficient market hypothesis that states that stock markets are semi-strong or strong form efficient, with stocks being priced correctly.   Index funds are arguable more successful portfolio management method on the believe that markets are significantly efficient and active manager will not be able to gain excess returns, after taking into account the excessive costs involved in active management. Passive management seeks to deliver the return and risks associated with the chosen index. Evaluation of index funds performance is in terms of how closing the portfolio tracks the underlying index in terms of returns. The costs associated with index funds are in rebalancing the portfolio. It assumes that when the economic condition changes and the assets weight within the portfolio can be redefined automatically. However, in rebalancing the portfolio involves physical selling of high stocks and selling low stocks, which involve transaction costs. This result in tracking errors driven by transaction costs, funds cash flows un-invested, treatment of dividend by the index and index composition changes. Finally, the liquidity of the underlying index stocks can have an impact on transaction costs and subsequently the tracking error encountered by the portfolio. References Bibliography http://www.cypram.com/passive.html Lumby, S., Jones, C., (2004), Corporate Finance – theory and practice 7th edition, Thomson ACCA Paper 3.7 (2001) Strategic Financial Management, The Financial Training Company http://www.nseindia.com/content/press/jul2003b.pdf#search=tracking%20error%20and%20methods%20of%20indexing

CMTG Network Security Infrastructure

Each Kudler Fine Foods location would be protected via higher end firewall recommended for small/medium size businesses with higher security requirements (Cisco, Watchguard, Barracuda). Each Kudler Fine Foods location, regardless of its geographical location, would have hi-speed internet access that would keep it connected to the headquarters location. Each firewall would be configured to provide maximum security for each location as well as Virtual Private Network (VPN) connection between the location and the headquarters. Headquarters location would host Main POS Database Server which would be synchronized with all other POS database servers every fifteen to thirty minutes. All of the synchronization would take place via VPN that has 1024bit encryption. Each geographical location would be able to access necessary data and files at the headquarters location via VPN at any time. Depending on the network authentication and network policies, not every person would have access to the same data. Since Kudler Fine Foods employs only two computer support specialists, we would recommend for the email to be hosted off site and be accessed either via Outlook Web Access (web-mail) or POP/SMPT/IMAP protocols with the Microsoft Outlook client. We also recommend that Email SPAM filtering be provided by the Email Host, but Kudler Fine Foods computer support staff should have access to email spam filters and manage them as they see fit best for the organization. Read this  Chapter 2 – Why Security is Needed We would also recommend for the Website to be hosted outside of the Kudler Fine Foods network but would recommend that Website’s database be synchronized with the network database via secure connection. Main reason for suggesting Email and Website services to be hosted off-site is security, downtime and support staff. Each firewall would handle IDS and IDP (intrusion detection and prevention service), as well as web access filtering, attachment filtering, traffic monitoring, virus scanning. Each computer and server would also run virus protection software. Firewall would be setup to shut down and block any suspicious network incoming/outgoing traffic in case of security breach and log it and email notify the computer support specialist (DoS, Hacker attacks, Virus outbreak). Firewall security updates would be done automatically and in the background and would provide security against latest threats. We believe that proposed network security infrastructure for Kudler Fine Foods would be secure, centralized, manageable by the small IT staff, reasonably priced to implement and easily upgradable and expendable in the future.

Psychoanalysis of Iago Essay

In William Shakespeare’s play, Othello, the character Iago lacks a superego which allowed his id to run free and this caused him to lack any form of sympathy and to become a sociopath. This led to him hurting everyone he could and to his eventual downfall. He also tried to justify his actions throughout the play to reinforce his righteous ego. First to understand Iago and his actions we must look at what the id, ego, and superego actually are. According to Freud these are different divisions that make up your mind. The id is the primitive side of your mind. Its only purpose is to seek out and obtain pleasure. The id will do anything it has to obtain it goals no matter how amoral or dangerous its actions may seem. Freud states that the superego is the complete opposite of the id. The superego’s goal is to apply moral values to obtain one’s wishes. The superego imposes guilt, shame, self-doubt, and anxiety to control one’s actions. The ego is the section of your mind you are most aware of. The ego’s goal is to compromise between the two other sections by using logic. It tries to satisfy both the id and the superego. Sometimes the ego becomes overwhelmed and to protect itself it must deploys defense mechanisms. This relates to Iago because he lacks a superego which tells him right from wrong. Since his superego is no longer functioning the ego does not have to compromise between the two sides. However his ego is not useless it still has a purpose. It uses logic to get what his id wants that’s why Iago always has a plan to obtain what he desires and it also justifies his actions. His ego also justifies his actions so he can live with himself. Therefore Iago’s id and ego are operating as they should and it is his superego that is absent. Without a superego and left with his id in control, Iago has all of the traits of a sociopath according to the American Psychiatric Association’s diagnostic and statistical manual of mental disorders. The first trait that Iago has in common with a sociopath is deception. Iago constantly lies throughout the novel to just about everyone he meets. One example of this is when he is speaking with Montano and he says, â€Å"Tis evenmore the prolongue to his sleep. He’ll watch the horologe a double set If drink rock not his cradle.†(Othello II, III, 89). In this quote Othello is trying to spread a  rumor about Cassios’s drinking problem. Except Cassio does not have one. Iago is trying to ruin Cassio’s reputation. This example also leads to another trait of Iago’s which is his conning and manipulation. Like deception Iago uses manipulation throughout the play. For example Iago is talking to Roderigo and he says, â€Å"Thou art sure of me. Go, make money. I have told tee often, and I re-tell thee again and again, I hate the Moor. My cause is hearted. Thine hath no less reason.†(Othello I, III, 53). In this quote he is trying to convince Roderigo that he into giving him all of his money because they share the same cause. However Iago is just trying to use Roderigo to obtain money. The final trait Iago has is that he lacks empathy and he lacks remorse. I excellent example of this is when Iago’s wife, Emilia, is about to illuminate Iago’s plan to ruin Othello. Iago stabbed Emilia, his wife, before she could elaborate and later on she died from her wounds. Iago felt no remorse for the death of his wife and showed no empathy towards her when he stabbed her. Sociopaths are very capable of self – control. Like Iago they use logic to take calculated risks and to blend in with society. Iago does this throughout the novel which is why he was known as honest Iago because he blended in so well that no one suspected that he was committing any amoral acts. Most of Iago’s actions throughout the novel can be associated with calculation, deception, Manipulation, and lack of empathy and remorse. These are the traits of a sociopath therefore Iago can be considered a sociopath. Iago’s traits and actions would cause most people to become guilt ridden even without a superego. However Iago does not because his ego deploys a defense mechanism. This mechanism is called rationalization. Iago makes up excuses and justifications for his actions. For example the whole point of him trying to make Othello jealous was to get Cassio fired. He felt that he was more deserving of Cassio’s position however once he has the position he continues to try to ruin Othello’s life. He also justified his actions against Othello by telling himself that Othello slept with his wife however this was just a rumor and was never proven. He justifications is how he is able to able to live with the things he had done. The plot of this entire novel is based on Iago’s sociopathic traits. Without any of these traits the plot of this novel would dramatically change. Iago is a direct cause for  most of the events in the novel such as Othello becoming suspicious of Desdemona or the deaths of some of the characters. Without these traits Iago would no longer act like a sociopath and therefore he would no longer be the antagonist. The character Iago is very much a sociopath. He lacks sympathy for others and will take advantage of them given the chance. His lack of a superego accounts for this because his id is allowed to run free without any restrictions. This leaves his ego to justify his actions and to make calculated decisions to satisfy the id without getting caught. However his id’s desires eventually lead to his and everyone else’s downfall.

Character Analysis Mama Nadi From Nottages Ruined

The atrocities of modern-day Africa come to life on stage in Lynn Nottages Ruined. Set in war-torn Congo, this play explores the stories of women trying to survive after and during brutal experiences. It is a moving story that was inspired by the true accounts of women who survived such cruelty. The Inspiration for Nottages Ruined Playwright Lynn Nottage set out to write an adaptation of Berthold Brechts Mother Courage and Her Children  that would take place in the war-ravaged nation, the Democratic Republic of the Congo. Nottage and director Kate Whoriskey traveled to Uganda to visit a refugee camp where thousands of men, women, and children hoped to avoid the atrocities of the barbaric government and the equally cruel rebel militants. It was there that Nottage and Whoriskey listened as dozens of refugee women shared their stories of pain and survival. The women recounted unimaginable suffering and nightmarish acts of violence and rape. After gathering hours upon hours of interview material, Nottage realized that she would not be writing a re-invention of Brechts play. She would create her own structure, one that would incorporate the heart-wrenching narratives of the women she met in Africa. The result is a play called Ruined, a tragic-yet-beautiful drama about holding onto hope while living through hell. The Setting of Ruined Ruined is set in the Democratic Republic of the Congo, probably sometime between 2001 and 2007. During this time (and still today), the Congo was a place of territorial violence and immeasurable suffering. The entire play takes place in the slipshod bar with makeshift furniture and a run-down pool table. The bar caters to miners, traveling salesmen, military men, and rebel fighters (though not usually all at the same time). The bar provides its guests  with drinks and food, but it also functions as a brothel. Mama Nadi is the shrewd owner of the bar. As many as ten young women work for her. They have chosen a life of prostitution because, for most, it seems to be their only chance of survival. The Roots of Mama Nadi Mama Nadi and the other female characters of Ruined are based upon the experiences of real women from the DRC (The  Democratic Republic of the Congo). During her visit to the African refugee camps, Nottage collected interview material and one of the women was named Mama Nadi Zabibu: she is one of fourteen women who  receive thanks in Nottages acknowledgment section. According to Nottage, all of the women she interviewed were raped. Most were raped by multiple men. Some of the women helplessly watched as their children were murdered in front of them. Sadly, this is the world which Mama Nadi and the other characters of Ruined have known.   Mama Nadis Personality Mama Nadi is described as an attractive woman in her early forties with an arrogant stride and majestic air (Nottage 5). She has etched out a profitable business in a hellish environment. Above all things, she has learned duplicity. When the military enters the bar, Mama Nadi is loyal to the government. When the rebels arrive the following day, she is devoted to the revolution. She agrees with whoever is offering cash. She has survived by being charming, accommodating, and serving anyone, whether honorable or evil. At the beginning of the play, it is easy to vilify her. After all, Mama Nadi is part of a modern-day slave trade. She buys girls from a friendly traveling salesmen. She offers them food, shelter, and in exchange, they must prostitute themselves to the local miners and soldiers. But we soon sense that Mama Nadi harbors compassion, even if she attempts to bury her altruism. Mama Nadi and Sophie Mama Nadi is most altruistic when it comes to a young woman named Sophie, a beautiful, quiet girl. Sophie has been ruined. Basically, she has been raped and assaulted in such a brutal manner that she can no longer have children. According to the local belief systems, men would no longer be interested in her as a wife. When Mama Nadi learns of this, perhaps realizing the injustice of not just the attack but the way society rejects women who are ruined, Mama Nadi does not shun her. She allows her to live with the other women. Instead of prostituting herself, Sophie sings at the bar and helps out with the accounting. Why does Mama Nadi have such empathy for Sophie? Because she has experienced the same brutality. Mama Nadi has been ruined as well. Mama Nadi and the Diamond Among her many little treasures and wads of cash, Mama Nadi possesses a small but precious stone, a raw diamond. The stone does not look impressive, but if she sold the gem, Mama Nadi could live well for a very long time. (Which makes the reader wonder why she stays in a makeshift bar in the Congo during a civil war.) During the middle of the play, Mama Nadi discovers that Sophie has been stealing from her. Rather than being angry, she is impressed by the girls audacity. Sophie explains that she was hoping to pay for an operation that would mend her ruined condition. Sophies goal obviously touches Mama Nadi (although the stern woman doesnt show her feelings initially). During Act Three, when the gunfire and explosions are getting closer and closer, Mama Nadi gives the diamond to Mr. Hatari, a Lebanese merchant. She tells Hatari to escape with Sophie, sell the diamond, and make sure that Sophie receives her operation. Mama Nadi gives up all of her wealth in order to give Sophie a new beginning.