SIA Seminar 1(1)-2 - mmm PDF

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SIA Seminar 1 October 2020 Seminars are designed to offer students the opportunity to explore and discuss issues and problems in depth. All students are expected to prepare answers to questions for each session. Seminar attendance is compulsory. 1. The first part of the seminar will be devoted to a discussion of the use of StockTrak in constructing, maintaining and evaluating the performance of your teams’ portfolio. The importance of an Investment Philosophy 2. Read the following: 1. Damodaran (2003) Investment Philosophies Chapter 1, available on DUO. 2. Martin and Puthenpurackal (2008, available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=806246 Consider the following issues and come prepared to discuss: •

Why it is important to have an investment philosophy. Distinguish carefully between investment philosophy, strategy and techniques.

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How you would construct your own personal portfolio. What are the key variables that influence your decision?

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What are the implications for investors of Markowitz’s (1952) work that became known as Modern Portfolio Theory for portfolio construction? Do ‘strong’ returns actually depend upon diversification? Go to https://www.cnbc.com/berkshire-hathaway-portfolio/ and examine Buffet’s portfolio. What light, if any, does it shed on this discussion? Consider alternative ways in which an investor’s portfolio could be constructed.

Environmental, Social and Governance (ESG) Investing 3. Watch the following video on the Rise of ESG investing: https://www.youtube.com/watch?v=OQ1cliM0b0Q and read the following FT articles: Ethical Funds Failing Social Responsibility Tests How ESG can have unintended consequences Companies with strong ESG scores outperform, study finds New research muddles case for ESG outperformance (You should have a look at the findings of the papers cited) ESG funds attract record inflows during crisis The dubious appeal of ESG investing is for dupes only

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Discuss the issues that the emergence of a more ethically conscious investor poses for investors and traditional investment management, illustrating your answer with one or more examples.

You might also consult: MSCI (2017) ESG 101: What Is ESG Investing? McKinsey (2019) Five ways that ESG creates Value 4. Read the FT article Investment lessons to learn from the VW scandal 

What lessons can be learnt from an investment perspective from scandals like those at Volkswagen?

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How might this impact on your own investment strategy?

Global influences on investment decision-making 5. What are the most important factors in the global economic environment currently influencing investment decision-making?

References Damodaran, A. (2003) Investment Philosophies: Successful Strategies and the Investors Who Made Them Work. John Wiley & Sons. Martin, Gerald S. and Puthenpurackal, John (2008) ‘Imitation is the Sincerest Form of Flattery: Warren Buffett and Berkshire Hathaway’. Available at SSRN: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=806246 Markowitz, H.M. (1952) ‘Portfolio Selection’, Journal of Finance, Vol. 7, No. 1, pp. 7791....