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Japa International investment
philosophy is based on the principle that
we should 1) devise successful strategies that should provide positive
expectations and 2) invest the right amount of money to increase wealth
and to limit losses.
Much
has been written about efficient markets and modern portfolio
theory developed by Harry Markovitz in the 50s. Eugene Fama's random
walk theory even asserts that price movements will not follow any
pattern or trends and that past price movements cannot be used to
predict future price movements. Traditional financial market theories (CAPM)
are based on the assumption that the market participants are
rational.
Markets are believed to be efficient and as such at any given time, security
prices reflect all information.
In other words, expecting
a profit in the buying or selling of securities is a matter of chance
not skill.
However,
investors like Warren Buffett do exist. A student of Graham and Dodd who
developed
methods to valuate securities, looking for deeply depressed prices,
Buffett is one of the most famous investor in
history.
Investors
are not rationale. Investors tend to be overconfident or under confident
depending on the circumstances or tend to over or under-react to
events. Behavioral finance. developed in the 70s, inquires
into the irrational behavior of investors and attempts to structure the
observations to formulate explanatory theories and to postulate decision.
Active management is believing that there could be discrepancies
in, (price) expectations and/or
investors’ risk
preferences and
acting on it
Whether
or not passive investment or active investment is preferable is a debate
that will continue to be subject of many newspaper articles. However,
what we all know is that asset allocation is key to explaining portfolio
variation.
At
Japa International, we believe our role is to construct and manage
portfolios that meet the individualized needs and expectations of our
clients. As a boutique financial institutions, we can provide unique and
targeted portfolios. As a learning organization, we spend time
with our clients to discuss alternatives in order for them to make
more informed decisions regarding their investment.
Click here for more details...
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