...Gmo: the Value Versus Growth Dilemma Ferret out – reveal Laggard Overlook-ignore GMO: The Value Versus Growth Dilemma | 1. What is value investing? What is its rationale? What are GMO’s main arguments in favor of value investing? Value investing is a way of investing in company stocks that are considered either undervalued or out-of-favor by the market. In other word, a value investment is one where the intrinsic value of the stock is not accurately reflected in the current market valuation. The underlying reason of too much decreasing in the stock price is that the company may be losing market shares or even in trouble due to market’s panic attributed to negative rumors as well as having management problems. Since the market price has dramatically descended, the book to market ratio of that stock will conversely increase. Consequently, this fraction is an important indicator that value investors will look at in order to justify if a particular stock is value stock or not. The rationale for investing in such value stock is that after the forces that are depressing the stock have diminished, the market price of value stock can only go upward from the bottom position to realize the stock’s hidden potential value at some point in the future. Notably, the key assumption is that once the market finally acknowledges the inefficiency that the price is too low when compared to the expected future returns, it will bump up the price and the value investors will directly benefit...
Words: 1454 - Pages: 6
...An Analysis of Value and Growth Investing Saint Leo University An Analysis of Value and Growth Investing This essay will define and identify the differences between value stocks and growth stocks. It will also explain the rationale that investors use for purchasing both value and growth stocks, and will identify whether value or growth investing has worked best over the long term. In addition this essay will provide incite as to which of the two investment methods I prefer and a justification for this preference and lastly will identify a recent example of someone who can be described as a value or growth investor and describe their successfulness with the method they chose. Value and Growth Stocks Defined According to our text, value stocks and market stocks are defined relative to their market-to-book ratios. A market-to-book ratio that well exceeds 1 indicates that the value of a firm’s assets exceeds their historical cost. As such, stocks with lower market-to-book ratios are classified as value stocks, while stocks with high market-to-book ratios are known as growth stocks (Berk, 2014, p. 28). When compared to stocks within a similar industry, value stocks may be lower priced and are considered more of a bargain, while growth stocks are more highly priced relative to those in their industry. Purchasing Value Stocks Versus Growth Stocks There are a variety of reasons that any investor might use to purchase a particular type of stock. Most of the reasoning...
Words: 1072 - Pages: 5
...to be a good analyst? Do you have an industry preference? If so, why? Tell me about a problem or project that you worked on and how you went about solving it. What other firms are you interviewing with? Why do you want to work for us? What are your long term goals? What are you looking for in an internship/job? What classes have you taken? What have been your favorites? Least favorite? Why? Tell me about a time when you had to take a stand, and were met with opposition to your view. What was the outcome? What sort of teams have you worked with successfully and unsucessfully in the past? Talk about a failure. How did you overcome it? What are your strengths and weaknesses? What is your investment philosophy? Columbia is known for value investing—who are the top 3 value investors that you admire. Market/Stock Pitch related: 20. 21. 22. 23. 24. 25. 26. 27. Where do you think the market is going? Why? Do you own/have you owned any stocks? Tell me about them. Why did you buy/sell them? What stocks do you like now? (Should have 2-3 picks prepared, and expect follow-up questions) How did you arrive at your target price? What are the drivers? What are 5 ways a company can manipulate earnings? What are five questions you would ask a company’s management? How do you value management? When it’s your turn to ask the interviewer questions, here are some broad suggestions: 28. 29. 30. 31. 32. Investment...
Words: 367 - Pages: 2
...Mary Harrigan Financial Management RTG Professor Kevin Mirabile April 4, 2014 Socially Responsible Investing Socially responsible investing is a process of investing in which traditional financial analyses are coupled with an evaluation of a company’s corporate citizenship in order to best determine if a company is inline with potential shareholders’ vision. Socially responsible investing extends beyond analyses of a company’s financial activity through the incorporation of analyses related to environmental, social, and governance issues. This report will examine the origins of socially responsible investing, how it works in practice, its performance relative to non-socially responsible investments, and what role it will play in regard to my future personal investment portfolio. Socially responsible investing rose in popularity during the 1960’s due to the heated political climate. At this time, shareholders prompted companies to act in accordance with their political beliefs as issues like the Vietnam War, civil rights, and equality for women took the national spotlight. Throughout the 1980s, the Apartheid crisis in South Africa further mobilized socially responsible investing as shareholders’ investing strategies became focused on pressuring the South African government to repeal the Apartheid. In more recent years, issues such as gun control, human rights, and healthy working conditions have been the most common platforms in which shareholders advocate for (Schueth)...
Words: 661 - Pages: 3
...Impact Investing and the Power Sector in Ghana By Godfred Amewu Despite the positive economic news and encouraging trends that have emerged from Ghana over the past decade, the troubling reality remains that the everyday livelihoods of Ghanaians have not kept pace with macroeconomic growth, and per capita GDP persistently lag behind the rest of the world. There is diverse school of thought deeply explaining why the livelihoods of Ghanaians are not keeping pace with the impressing economics figures quoted over the years. We submit that Impact Investing can address the stubborn income gap because it is vibrant and robust enough to promote sustained economic growth and generate long-term, viable livelihoods across the country. The very phrase “impact investing” sounds rapacious, but it is an emerging hybrid of philanthropy and private equity that proponents say is about to become more widespread. The Global Impact Investing Network (GIIN) defines Impact investments as investments made into companies, organizations, and funds with the intention to generate measurable social and environmental impact alongside a financial return. They can be made in both emerging and developed markets, and target a range of returns from below market to market rate, depending upon the circumstances. From the above definition, it could be seen that impact investment has two main effects. Thus, the social effect and the economic effect. The social effects improve the livelihoods of society and...
Words: 859 - Pages: 4
...www.hbr.org Studies of corporate performance reveal a growing link between certain kinds of technology investments and intensifying competitiveness. Investing in the IT That Makes a Competitive Difference by Andrew McAfee and Erik Brynjolfsson Included with this full-text Harvard Business Review article: 1 Article Summary The Idea in Brief—the core idea The Idea in Practice—putting the idea to work 2 Investing in the IT That Makes a Competitive Difference 11 Further Reading A list of related materials, with annotations to guide further exploration of the article’s ideas and applications Reprint R0807J Investing in the IT That Makes a Competitive Difference The Idea in Brief It’s not just you. It really is getting harder to outpace the other guys. Since the mid1990s, competition in the U.S. economy has accelerated to unprecedented levels. The engine behind this hypercompetition: IT. Thanks to powerful tools like ERP and CRM, backed by cheap networks, companies are swiftly replicating business-process innovations throughout their organizations. The firm with the best processes (order fulfillment, field installation, job closing) wins, but not for long. Rivals are striking back with their own IT-based process innovations. To gain—and keep—a competitive edge in this environment, McAfee and Brynjolfsson recommend a three-step strategy: • Deploy a consistent technology platform, rather than stitching together a jumble of legacy systems. • Innovate better ways of working...
Words: 7023 - Pages: 29
...Record: 1 Title: Investing is like dieting Authors: Trish Crawford Toronto Startcrawford@thestar.ca Source: Toronto Star (Canada), 10/09/2010; ISSN: 0319-0781 Accession Number: 6FP2287240844 Persistent link to this record (Permalink): http://proxy.devry.edu/login?url= Cut and Paste: <A href="http://proxy.devry.edu/login?url=">Investing is like dieting</A> Database: Newspaper Source Plus Investing is like dieting Financial expert and author gives women the tools to help them save and invest their money Section: Zoned Living, pg. L15 If you've ever been on a diet, then you know how to save money, says author Susan Hirshman. The former investment manager with global financial management firm J.P. Morgan in New York, has written a book Does this Make My Assets Look Fat? (St. Martin's Press) geared toward women. Using the analogy of going on a diet, the CPA divides investments into four basic "food groups,"stocks, cash, bonds and alternative investments. Diet tricks, from counting calories to having a buddy, can be easily transferred to money management, she says. Her motto is, "A man is not a financial plan; the only person responsible for you is you." Do women lack money management skills? It's not just a problem with women but both women and men. The issue is, where are we supposed to learn this? No one teaches us this in school. What happens when we don't have this knowledge? We fall into four types. The Princess is the person who...
Words: 856 - Pages: 4
...THE ACCIDENTAL INVESTMENT BANKER This page intentionally left blank THE ACCIDENTAL INVESTMENT BANKER · Inside the Decade That Transformed Wall Street · JONATHAN A. KNEE 1 2006 1 Oxford University Press, Inc., publishes works that further Oxford University’s objective of excellence in research, scholarship, and education. Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam Copyright © 2006 by Jonathan A. Knee Published by Oxford University Press, Inc. 198 Madison Avenue, New York, NY 10016 www.oup.com Oxford is a registered trademark of Oxford University Press All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of Oxford University Press. Library of Congress Cataloging-in-Publication Data is available ISBN-13: 978-0-19-530792-4 ISBN-10: 0-19-530792-5 1 3 5 7 9 8 6 4 2 Printed in the United States of America on acid-free paper For Chaille Bianca and Vivienne Lael and William Grant who says he wants to be an investment banker ACKNOWLEDGEMENTS As a f i r s t - t i m e au t h o r ...
Words: 114081 - Pages: 457
...Yahoo, Warren Buffett and $1 Billion Contest Eric J. McGlashing Feb 10, 2014 TOPICS: Insurance, Risk and uncertainty SUMMARY: A lawsuit involving Yahoo sheds light on the insurance policies that enable contest prizes like the $1 billion Warren Buffett is offering to anybody who predicts the winner of every March Madness basketball game. CLASSROOM APPLICATION: Students can struggle with framing the problem of the uncertainty involved in calculating expected payment and the risk involved in offering a prize for correctly picking the NCAA basket tournament bracket winners. Students can work on a simplified problem of a four-team tournament (as opposed to a 64-plus team tournament) and a small number of fans choosing the winners. Students should be forced to think about the distributions of the fans' probabilistic beliefs about the game winners. QUESTIONS: 1. (Advanced) Suppose in a tournament game between teams i and j that team i is expected to beat team j with probability p. What is the value of p for each of the tournament's games that make it least likely that a gambler can correctly pick of the tournament's winners? 2. (Introductory) Suppose in round 1 of the tournament that one and only one lower-seeded team is going to win a game. What is the probability that a gambler will correctly pick the one team? 3. (Advanced) What is the probability that any one fan will correctly pick all bracket winners? What is the probability that at least one of four fans...
Words: 707 - Pages: 3
...POLAND The cliched western view of Poland – bogged down by communist inefficiency and rusting tractors – is long gone. This was the only EU economy ( It joined EU in 2004) to avoid contraction in the dark days of 2009, leading the prime minister to describe Polish economic growth (albeit at a modest 1.6%) as a "green island" amid the red sea of recession elsewhere in the union. There has been massive public investment due to the European football championship (UEFA Euro 2012) that Poland co-hosted. And the weakening Złoty., which suffered when traders became increasingly nervous about the worsening debt situation in Greece and other eurozone members, has helped to keep exports ticking over. “The biggest threat to the security and prosperity of Poland would be the collapse of the eurozone” - Radek Sikorski, Poland's foreign minister. Krzysztof Rybinski, a Polish government critic has said that 2011 was the last good year for the Polish economy and that things will go downhill from the second half of 2012, for want of decent reforms in the face of an economic slowdown, an ageing population and a looming energy crisis. As a party to 89 Double Taxation Treaties throughout the world, Poland is indeed open for international business. Offering a large domestic market coupled with political and economic stability and various government incentives for investors, Poland is placed by the United Nations Conference on Trade and Development (UNCTAD) among the top countries to attract...
Words: 790 - Pages: 4
...Financing and Investing By: Marissa Woodring Introduction to Accounting Professor Genet August 12, 2009 Abstract I will be explaining what is important for each company to know about our financial statements here at Target. This way, my supervisor knows what to prepare for in an upcoming meeting with two companies that are willing to invest and finance with the Target Corporation. Financing and Investing Two companies are looking into working with the Target Corporation. One company is looking to invest and take part ownership over the company. The other company is willing to give out a loan for Target to expand its operations. My supervisor will soon be meeting with these companies separately and needs to know what he will need to convince the companies to make the right decision. I have looked over our financial documents and highlighted the important information needed for my supervisor in his upcoming meetings. Company #1 This company is willing to take part ownership and invest in our Corporation. The first thing the company is going to want to know is where our cash is coming from. For this, we are going to look at our statement of cash flow. If we have operating activities it is a good sign for these companies, investing activities are a bad sign, and financing activities are an okay sign. Next, they will want to know if our high sales and profits are translating into more cash. We will also look at the statement of cash flow to figure this out. The...
Words: 795 - Pages: 4
...Saving or Investing How do you decide where to put your money? People are well aware that they need to save money. That being said saving in itself is not really going to help you; you have to do something with the money. That means that you will need to invest your money. A lot of people are afraid to do this but there is really no reason to be afraid if you know what you are doing. What are the differences between saving and investing? Your "savings" are usually put into the safest places or products that allow you access to your money at any time. Examples include savings accounts, checking accounts, and certificates of deposit. When you "invest," you have a greater chance of losing your money than when you "save." But when you invest, you also have the opportunity to earn more money than when you save. Investing is, well, everything else. Instead of putting your cash in a savings account, when you invest you are generally putting your money into company shares, government or corporate bonds or property – either directly or through a fund. This involves accepting the risk you may get back less than you put in, which is why the rewards – when they do come – are higher. Done well, investing should protect your money against the effects of inflation and give you a stronger return, compounded over time. Of course investment and saving are not separate things; in order to have money to invest you will need to save it. The important point is that you are better off investing...
Words: 1148 - Pages: 5
...In the United States, a society plagued by capitalism, investing has become a way of life. To most Americans it begins with opening a savings account and slowly allowing that money to grow through the compounded interest rate over the years. While it may not seem like a big step in generating more income, nonetheless, this is a positive movement in the market of investments. With the many types of investments available knowing which are reliable, or safe, or yield good returns, are just some of the questions on the investors mind. Within each asset class there are investments to suit different kinds of risk, duration, returns and liquidity. Bank savings account, as stated before, is the simplest kind of short-term investment. The returns on savings account are low when compared to other investments, but the returns are guaranteed by the supplier, in this case the bank. Banks offer security meaning if a bank was to go broke the federal government through the FDIC (Federal Deposit Insurance Corporation) insures your bank deposits of up to $100,000. Having guaranteed returns means an investment will not lose its value in the short term unlike other investments. The bank pays interest to you account for saving your money with them. Bank fixed term investment also known as certificate of deposit is when you deposit a sum amount of money for a set period usually three, six or twelve months. The money becomes locked away for the fixed term but, in return, you get a higher interest...
Words: 1498 - Pages: 6
...potato chips, Gatorade sports drinks, Quaker Oats, Tropicana, and many more for a total of twenty-two well known brands across the world. Pepsico is part of an oligopoly market, which means it’s “an industry that contains two or more firms, at least one of which produces a significant portion of the industry’s total output” (Ragan, 2013). Company’s that are in an oligopoly competition market can use either high-price or low-price strategy to maximize their revenue and profits. Because Pepsico is in an oligopoly market, their products are substitutes for other company’s products, therefore their products have a high and positive cross elasticity of demand. Price elasticity of demand is another component you must understand when considering investing in Pepsico. Price elasticity “is the measure of responsiveness of the quantity of a product demanded to a change in that product’s price” (Ragan, 2013). In order to properly identify whether a...
Words: 489 - Pages: 2
...Abstract This paper will explain investing in products and services within my own organization and how they produce returns so that stockholders, stakeholders, and others are interested in the organization. In the most recent economic downward spiral many have turned to areas of opportunity to invest back in themselves via education in hopes when the economy turns around they are the cream of the crop and ready for the new employment opportunities. Online education providers are in need of the same mind set to which they must find ways to invest in the student via products or services. These types of investments in my current organization of education is label as student success; not only driving profit by accepting the student in class but over time providing services that will prompt the overall success of the student until graduation. “Most Americans, I believe, would define student success as the ability of a student to support themselves in society after completing the educational process. Our value and belief systems are strongly based on economics and accumulation of material wealth. How often do you hear parents say, “I don’t want my children to have to come home to live with me after completing their education” (Edutopia, 2012)? Online education is simply online education unless the provider is doing something different to give the student a better experience than the market of profit schools. Currently my university has not only grown with more ground campus but...
Words: 1187 - Pages: 5
