What is Sharpe Ratio ?

Are you willing to invest on something without actually knowing if it will actually generate a market and thereby a profit at the right time? Not if you are not actually an investor. You see, an investor is also a venture who wants to take risks on investments that are not actually sure to generate leads or profits.

There is always a 50-50 shot of making or not turning up a profit, but that is the beauty of it for investors. The risk they are taking will always justify the result they would be taking. And that is what you lived for, being an investor yourself.

If you wanted to be a little more systematic and scientific though, you will find a number of proven methods and investment strategies that will actually work for you and your investments. There are formulas you can use to know or predict if things are working out for you or not. Continue reading

Smart Ways to Manage Private Equity Profitably

Stocks buying and investing is sometimes a little exaggerating. You have to continue monitor the ups and downs of the asset where you placed your money at, and if you don’t want to do that, you need to hire a broker or an agent to do the dirty work for you.

But you still have to deal with the discomfort of phone calls at any time of the day and night. For this reason that you might want to place your money on a more exclusive investment like a private equity.

This is basically the term used to identify an exclusive asset class that includes equity securities of non-public traded operating companies on a stock exchange. Continue reading

How to Develop Great Investment Strategy?

In anything that you do, it is best to have a strategy. This set of procedures or rules will help you organize your thoughts or actions. With that on top of your mind, you can always expect the best result from your actions or decisions. That is also the same in banking and finance.

The same is true in investments. If you want the best end product of your money, you have to make a good investment strategy. On top of that, you should also practice the procedure or method that you have designed.

There are very many investment strategies being practiced in the business world these days, but the most prevalent is buy and hold. This investment strategy is just what its name suggests: you buy a product or merchandise and then keep it for some time until it is best to sell it off. Continue reading

Detecting Signs of Worsening Financial Ratios

Banking and finance are a bit difficult to understand because there are a lot of terminologies and computations that one needs to get through before landing a career on this discipline.

Among these are the financial ratios, which indicate the performance and financial capacity of a bank or financing institution.

Computing this ratio enables financial authorities to compare an institution to other institutions. It can also be used to predict a bank’s situation like bankruptcy and the like.

Financial ratios are usually based on the financial statements of a bank or establishment. And these documents are not always available for everyone who wants it. In the perfect world, banks and other financial institutions provides these reports to all their members. Continue reading

Understanding Financial Behavior and FInancial Psychology

Remember the market crash in the 17th century, junk bonds in the 1980s, and Internet stocks in the 1990s? These are phenomena that are cited by theorists to explain the financial behavior of most investors.

It is claimed that market prices can be affected greatly by the decisions of irrational investors.

The same belief is claimed by Adam Smith in his non-fiction book “The Theory of Moral Sentiments” which has two major observations that associates financial behavior to the result of investors’ decisions.

These are: 1. “Investors (and people in general) make decisions on imprecise impressions and beliefs rather than rational analysis.” You have seen this every day. Continue reading