╠ ۩ ╣ portfolio theory ۩
D. Abdulaziz Hamad AluwaishegWhen he won the American economist known for James Tobin, the Nobel Prize was asked about the most important achievements in the field of economics did not hesitate in saying it is "the theory of portfolio investment" portfolio theory, and added a little more seriously that the theory is only the application of what she said I found him repeatedly: "James, do not put all your eggs in one basket. "And a summary of the theory and say grandmothers is that it must be wise not to put confidence in one investment whatsoever, but must distribute the components of the portfolio on a large number of vessels of investment to mitigate risk, because any company no matter how strong may be subject to the conditions and temporarily or permanently lost their value, or part of it .
There are a number of simple rules, such as base 40% and 60%, meaning that the person distributes its investment by 40% to equities and the rest of the types of more stable investments such as real estate, bonds and funds money market funds.
There is another rule is% 5% and 20%, and mean not to put one of more than 20% in any particular sector, and not more than 5% of its investments in one company.
And full of investment books by the myriad of these rules, but what unites them is the above mentioned not to put investor confidence in one investment. These rules, of course, general rules must be adapted according to age, income, ability or willingness to take risks to other considerations.
These rules for investment and not for speculation, that is, they who wish to achieve growth and income safe and reasonable to the medium and long term, not for bats daily looking for a quick profit is not related to the company that contributes to it, but depends on the daily fluctuation of the prices and rumors of intended and unintended.
I was surprised to talk with a lot of individual investors in the Kingdom and the region in general in the overwhelming desire for adventure and gain rapid and narrow policy of any long or medium term, and focus most of the questions that I receive to seek advice with regard to speculation not investment.
Why this trend toward asceticism and speculative investment in the individual's normal? Of course there are many and complex reasons, but the major reason mentioned by many who I asked them is the lack of confidence in the future of the marketplace and in the ability of responsible agencies to manage them wisely in the event of crises, and cite the crisis in 2006 that still cast a shadow on the local markets. This avoids those speculators long-term investment and are looking for quick profits based on rumors, some of their own making tongues or nothing to do with the financial health of the company.
This means that the task of bodies of the financial market in the GCC countries to convince individual investors the durability of these markets is still difficult. But necessary task if we want to play its required role
D. Abdulaziz Hamad AluwaishegWhen he won the American economist known for James Tobin, the Nobel Prize was asked about the most important achievements in the field of economics did not hesitate in saying it is "the theory of portfolio investment" portfolio theory, and added a little more seriously that the theory is only the application of what she said I found him repeatedly: "James, do not put all your eggs in one basket. "And a summary of the theory and say grandmothers is that it must be wise not to put confidence in one investment whatsoever, but must distribute the components of the portfolio on a large number of vessels of investment to mitigate risk, because any company no matter how strong may be subject to the conditions and temporarily or permanently lost their value, or part of it .
There are a number of simple rules, such as base 40% and 60%, meaning that the person distributes its investment by 40% to equities and the rest of the types of more stable investments such as real estate, bonds and funds money market funds.
There is another rule is% 5% and 20%, and mean not to put one of more than 20% in any particular sector, and not more than 5% of its investments in one company.
And full of investment books by the myriad of these rules, but what unites them is the above mentioned not to put investor confidence in one investment. These rules, of course, general rules must be adapted according to age, income, ability or willingness to take risks to other considerations.
These rules for investment and not for speculation, that is, they who wish to achieve growth and income safe and reasonable to the medium and long term, not for bats daily looking for a quick profit is not related to the company that contributes to it, but depends on the daily fluctuation of the prices and rumors of intended and unintended.
I was surprised to talk with a lot of individual investors in the Kingdom and the region in general in the overwhelming desire for adventure and gain rapid and narrow policy of any long or medium term, and focus most of the questions that I receive to seek advice with regard to speculation not investment.
Why this trend toward asceticism and speculative investment in the individual's normal? Of course there are many and complex reasons, but the major reason mentioned by many who I asked them is the lack of confidence in the future of the marketplace and in the ability of responsible agencies to manage them wisely in the event of crises, and cite the crisis in 2006 that still cast a shadow on the local markets. This avoids those speculators long-term investment and are looking for quick profits based on rumors, some of their own making tongues or nothing to do with the financial health of the company.
This means that the task of bodies of the financial market in the GCC countries to convince individual investors the durability of these markets is still difficult. But necessary task if we want to play its required role
