Overview of Portfolio Theories

Overview of Portfolio Theories Introduction The word â€Å"Portfolio† can be defined as; the totality of decisions determining an individuals future prospects† (Sharpe, 1970). Portfolio can consist of many types of assets such as plant, property, real and financial assets (P.A Bowen, 1984). Portfolio theories propose how rational and prudent investors should use their due diligence to diversify their investments to optimize their portfolios, and how a risky asset should be priced as compared to less risky asset. People have been investing in the different assets class since decades but then they realize the importance of risk and its negative implications, if not treated effectively. Every investor has his own tolerance of risk and investors defines it in his ability of taking it. The portfolio theories have been derived over time in order to effectively measure the risk and how it can be reduced by diversify in their asset. Article 1: â€Å"The Legacy of Modern Portfolio Theory† This article covers the highlights of modern portfolio theory, describing how risk and its effects are measured and how planning and asset allocation can help you do something about it. Modern portfolio theory is the theoretical conflicting of conventional stock picking. It is being put forward by the economists, who try to understand the phenomena of the market as a whole, instead of business analysts, who look for individual investment opportunities. Investments are explained statistically, as how much investor expected long-term return rate and their expected short-term volatility. It measures how much expected return can deviate much worse than average an investments bad years are likely to be. The goal of the theory is to identify your adequate level of risk tolerance, and then to come up with a portfolio with the maximum expected return for that level of standard deviation (risk). The portfolio it assumes that the investment universe consists only of two market securities, the risk free asset and risky assets. But the actual investment universe is much broader than that being put forward. The optimal level of investment is to invest on efficient frontier but doing this would mean to calculate the millions of covariance among the securities. This calculation could make the life of analyst as difficult as one could have ever imagined. To think practically, its better to put portfolio theory to work means investing in a limited number of index securities rather than a huge number of individual stocks and bonds. Index investing is the point the where portfolio theory starts to rely on the efficient market hypothesis. When you buy an index based portfolio strategy youre allocating your money the same way the whole market is which is a high-quality thing if you believe the market has a plan and it is efficient. This is why portfolio theory is one of the branches of economics rather than finance: instead of only studying financial statements and different financial ratios, you study the aggregate behavior of investors, some of whom seemingly have studied financial statements so that market valuations will reflect their due diligence and prudence. Article 2: â€Å"Theory of portfolio and risk based on incremental entropy† The article has used incremental entropy to optimize the portfolios. This novel portfolio theory has been based on incremental entropy that carries on some facet of Markowitzs (1959, 1991) theory, but it highlights that the incremental speed of capital is a more objective criterion for assessing portfolios. The performance of the portfolio just cannot be justified with the returns because we have to keep in mind the risk of achieving those returns. Given the probability forecasts of returns, we can obtain the best possible investment ratio. Combining the new portfolio theory and the general theory of information, we can approach a meaning-explicit measure, which represents the increment of capital-increasing speed after information is provided. The article has used example to make it more clear that as we try to become rich within days there involve high risk of even losing those money which we at-least own at present. The ineffective investment is like a coin toss either you have al l the money in your pocket or you end having nothing in your pocket. The same being very risk averse would not help you become rich. You there has to be a balance in selecting the portfolio and this article explain the optimal investment ratio. (pg 1) Markowitz explains us that an efficient portfolio is either a portfolio that offers the maximum expected return for a given level of risk, or one with the minimum level of risk for a given expected return. There is no objective criterion to define the maximum effectiveness of a portfolio given the expected return and risk level and different expects have different view about it. The Markowitzs efficient portfolio tells us about the indifference curve of the investor and about the market portfolio. It is not the portfolio which we need for the fastest increment of capital. So, this article has derived a new mathematical model. The model explains that when gain and loss are have equal chance of occurring, if the loss is up to 100 percent, one should not risk more than 50 percent of fund no matter how lofty the possible gain might be. This conclusion has a great importance and significant for risky investments, such as futures, options, etc. Most of the new investors of future markets lose all of their money very fast because the investment ratios are not well controlled and generally too large. we can obtain the optimal ratios of investments in different securities or assets when probability forecasts of returns are given. Comparison with Markowitzs theory The new theory supports Markowitzs conclusions that investment risk can be reduced by effective portfolio, but there are some obvious differences: The new theory uses geometric mean return as the objective criterion for optimizing portfolio and gives some formulas for optimizing investment ratios; and . The new theory makes use of extent and possibility of gain and loss rather than expectation of return and standard deviation (risk) of the return to explain investment value. Article 3: â€Å"On the competitive theory and practice of portfolio selection† To select an optimal level of portfolio has always been a basic and fundamental problem in the field of computation finance. There are lots of securities are available including the cash and the basic online problem is to agree on a portfolio for the ith trading period based on the series of price for the scheduled i-1 trading period. There has been increasing interest but also mounting uncertainty relating to the value of competitive theory of online portfolio selection algorithms. Competitive analysis is based on the worst and most unexpected case scenarios and viewpoint; such a point of view is conflicting with the most widely used analysis and theories being adopted by the investors based on the statistical models and assumptions. Surprisingly in some of the initial experiments result shows that some algorithms which have enjoyed a highly regarded repute seems to outperform the historical sequence of data when seen in relation to competitive worst case scenarios. The emerging com petitive theory and the algorithms are directly related to the studies in information theory and computational learning theory, in fact some of the algorithms have been the broken new ground and set new standards within the information and computational theory learning based communities. The one of the primary goal and objective of this paper is understand the extent to which competitive portfolio algorithms are in reality learning and are they really contributing to the welfare of the investor. In order to find out so they have used set of different strategies this can be adapted to data sequence. This is being presented in a mixture of both strong theoretical and experimental results. It has also been compared with the performance of existing and new algorithms and respects to standard series of the historical sequence data and it also present the experiments from other three data sequence. It is being concluded that there is huge potential for selecting portfolio through algorith ms that are being derived from competitive force and as well as derived from the statistical properties of data. Article 4: â€Å"International property Portfolio Strategies† The article talks about the investment decisions regarding real estate, and try to put in the Markowitz mean variance formula to analyze the real estate market. They are not confined only to local real estate diversification but they are also including international diversification. Markowitz mean variance continuum and graph is useful in analyzing the efficient securities, and they help in the selection of an optimal portfolio on envelope curve taking into account the risk preferences of an investor. But when analysts try to incorporate real estate market to the Markowitz theory the major problems regarding liquidity, heterogeneity, indivisibility and information are faced by them which restrict them from further optimal analysis. Many investors have tried to support the theory to make a portfolio by considering property as asset like equity and bond investments; although there are a lot of differences among the characteristics of assets discussed above, but one can diversify its portfolio by investing in real assets, analysts argue. The discussion was dominated by the concept of international diversification of assets including real estate. To support the analysis in UK the (Sweeney , 1988-1989) work in cited most of the times, he came up with the famous model of real estate to come up with efficient diversification strategy, he used rental value of for different countries and came up with the model of risk return theory; after that a lot of analysts including: [Baum and Schofield (1991), Brà ¼hl and Lizieri (1994), Gordon (1991), Hartzell et al. (1993), Johnson (1993), Sweeney (1993), Vo(1993) and Wurtzebach (1990)], have come up with analysis to support international diversification; but the result was som ehow was not justifying the inculcation of real estate to portfolio theory, because those assets were not correlated at all when inspected for the risk return behavior during last decade or so. This can be attributed to the failure of mean variance model to produce results, the main problems facing would be regarding data collection, technicalities, omitted categories, and ex post analysis. This is almost irrational and impossible to find the most efficient way to diversify a portfolio by including real asset as a separate asset, because of area problems, different locality, pricing conditions, economic conditions, liquidity differences, and data collection problems. As real estate market is highly uncorrelated even within the industry so the data sets are very difficult to find for analysis because of lack of empirical data on this market. Article 5: â€Å"Different risk measures: different portfolio compositions?† Choosing the suitable portfolio of assets in which to invest is an essential component of fund management. A large percentage of portfolio selection decisions were based on a qualitative basis, however quantitative approaches to selection are increasingly being employed. Markowitz (1952) established a quantitative framework for asset selection into a portfolio that is now well known. The measure of risk used in portfolio optimization models is the variance. Variance calculates how much deviation could be expected from the set of portfolio. The alternative methods of risk have their own theoretical and practical advantages and it is atypical that they are not used widely by investors. One of the reason may be because of the difficulty and complexity of understanding such models and then practically implementing those models and to decide in which measure of risk is best and gives the most realistic and useful results. It is important to identify the common risk measure and without doi ng so any attempt to measure the risk would be useless exercise. In order to cope with this, another approach is considered that is to comparing the portfolio holdings produced by different risk measures, rather than the traditional risk return trade-off. It is than being observed that whether the risk measures used produce asset allocations that are essentially the same or very different. In order to probe this concern this study tested the proposition that different measures of risk produce minimum risk portfolios that are essentially the same in terms of asset allocations, using monthly data over the period January 1987 to December 2002. The results show that the optimal portfolio compositions formed by different risk measures vary quite noticeably from measure to measure. These finding are very useful and have a practical implication for the investors because it recommend that the choice of risk model depends entirely on the individuals attitude to risk rather than any theoretic al or practical advantages of one model over another. It has been concluded that different investors have they indifference curve different from other and some of them like to take more risk as compare to other who are happy at earning low but safe returns. Conclusion It is being concluded that risk is more of a subjective term and different analysts and investor measures and perceive it in their own way. In todays word not even a single person can underestimate the importance of risk in selecting a security and emphasized is been given to diversification through proper portfolio selection process and everyone tries to optimize their returns given a certain level of risk. In order to do so they are using different statistical measures those have been derived over time to calculate risk. So selection of such method is limited to the understanding of a certain method to a certain investor and their effectiveness of results as compare to other methods.

Impact of Cosmetic Advertisements on Women Essay -- Advertising Market

The Shape of America As marketing strategies have evolved, they have enhanced the ability of advertisers to communicate to the "masses" more effectively than ever before. This ability has allowed advertisers to not only reach more markets, but to be more influential in the decision making process of the audience. American society, especially young women, is being influenced by advertisers more now than in previous generations. It is not by accident that teenagers and young adults are targeted by advertisers, especially since their purchasing power as a group exceeds that of any other consumer group. Not only have advertisers learned to identify specific products that appeal to men and women, but they have also found that the "want" of the consumer can be turned into a "need" for the advertised product. Many of the beauty product companies advertise their products as a "need" which ultimately appeals to a vast majority of women. Estee Lauder’s beauty product is one such advertiser. In an August 2004 issue of Vogue magazine, enclosed was a two-page ad campaign intended to sell Estee Lauder’s â€Å"Future Perfect Anti-Wrinkle Radiance Moisturizers SPF.† This advertisment is appealing to the consumer because it stresses the importance of remaining young by the use of this product. This advertisement then goes further to stress that, â€Å"The past is forgiven, the present is improved, and the future will be perfect.† This advertisement includes three alluring models, all of which are of different ethnicity but essentially have the same physical attributes. This image is used to appeal to all sorts of American women. The models all have famished bodies; this includes their angular, somewhat gaunt faces and protruding collarbones. Located right below this image is the company’s slogan which reads, â€Å"ESTEE LAUDER. Defining Beauty.† The attempt is made with this adverti sement to define beauty with images of starved and malnourished models which Estee Lauder claims to be the standard for beauty. Estee Lauder is presenting its view of beauty to the consumer as the defining truth. The issue with the advertisment is the acceptance by the consumer that the Estee Lauder definition of beauty is truthful and factual. The targeted audience for this advertisement is women of all ages. Beauty is something extremely important to women and is constantly being reinforced in the socie... .... Of course these women are not "real" women, but far to often do women take drastic measures look like these fashion models; this eventually will lead to eating disorders or severe depression. According to Natural Health magazine, 44% of women who are average or underweight think that they are overweight. The average woman's dress size is 12 and the average mannequin/model's dress size is 4 (NBC.com); this makes women feel as if they will never be good enough. According to Melissa Raftery, "When we open a magazine, we never see some 400-pound woman on the first page. Instead we see a woman who is 23% skinnier that the average American woman" (What Is Beauty?). Unfortunately, Estee Lauder is not the only beauty product company that puts forth this â€Å"definition of Beauty† and beauty product companies are not the only companies â€Å"defining beauty.† As long as the targeted market continues to buy into the advertisers â€Å"perfection line,† the advertiser s will continue to deceive the public. For those who are gullible enough to believe this line of advertising, Estee Lauder ensures confidence and beauty all in one product. After all, their slogan does read, â€Å"ESTEE LAUDER. Defining Beauty!†

Observational Learning

There are a number of places where toddlers could be observed unobtrusively – at the park , the playground , the mall , and the daycare center . For the purpose of this study , however , I chose to go to the park and observe parents and their toddlers play together . This way , I could easily observe unobtrusively as people would think I was simply there to write or to write down my thoughts Another benefit that the park has to offer is the lack of formal structures and relationships such as those found at daycare centers .At the park , parents and toddlers could interact easily and in a relax manner . That way , the true nature of the relationship between the parents and the toddlers will be easily observed and analyzed and the understanding of the interactions between parents and children will be better understood . This then seeks to look at such a relationship by presenting direct observations from families and toddlers that visit the park in our community .I had a small n otebook with me and it is where I wrote down my observations , as well as the communication that went on between the parents and the children The toddlers that I observed were approximately between 16 to 30 months old and appeared to be pampered by care by their parents . One the toddlers belong to an Asian-American racial stock while the other one to an American family .Although the parents brought strollers with them the toddlers were walking and occasionally carried by their parents Both of the families of the toddlers seem to belong to the middle class Notably , the second toddler belongs to a mother without a father Although the author could not exactly know whether she is a single parent or not , at least based on the observation at the park , the mother does not have any other company in visiting the park Both toddlers appear to be enamored with their surroundings .They do notice the colors in the park and usually exclaim in delight when they see a butterfly or a bird . Appar ently , they are already starting to recognize some of the features of the environment and their understanding of what they are is already being formed in the minds of the young kids Toddler 1 The first toddler I observed is male . He displayed curiosity in his surroundings . While they were walking in the park , to the way where the family will sit down for an afternoon snack , the toddler was picking up sticks and leaves on the ground .He raised them to his eyes and offered them to his parents . The mother accepted the offer from the toddler and said that it was a leaf . She explained further that the leaf grows on the branch , which the toddler dutifully picked up and offered to her mother again . When the mother pronounced leaf ‘ and branch , the toddler also spoke up and attempted to pronounce the same words A child is very much curious and interested in his surroundings . As part of his cognitive development , he notices the shapes , colors , and different sensations and wonders he encounter in his world .Even at such a young age , he is also being initiated into the process of socialization where he learns the views of his parents and of the larger society where he is located (Turner , 1991 . The child , according to Piaget ‘s theory actively uses his senses to explore his environment and learn about them . Through the use of his senses , he is able to discern relationships among the actions he take and the behavior of the objects that he is viewing (Turner , 1991 Both the component of nature and nurture are at work in this seemingly simple process that the child is going through .He uses his eyes , his ears , his nose , and his whole body to discover the world and learn how it works . His efforts , because they are yet insufficient , are supplemented by his parents , more particularly by his mother , who tells him the names of objects and how they are being referred to in the world Through the explanation of the mother about the nature of t he relationship between leaves and branches , the child is then able to look at the relationship of different objects in his environment albeit in an incomplete fashion .The explanation of the mother regarding the relationship of leaves and branches may not be sufficient for the child to understand the relationship because most of the knowledge of a child advances through his actions and his interpretation about the consequences of the actions he make (Franz White , 1985 Notably , the toddler was now engaging in eye-to-eye contact with his parents and occasionally asks them for what he wants . His father brought out a ball that the toddler apparently loved playing with .The father and the child started playing with the ball – they played catch , and sometimes they would race together to get the ball first . The toddler was delighted with such play with his father . Although this is the case the child would also look at his mother and he asked her to come and join them . This is consistent with the theory of Erikson , which holds that the child ‘s relationship with his mother is perhaps the most important one during this stage of development (Franz White , 1985 The child continued to play with the ball and when he saw other children in the park , he also went to them and offered to play the ball with them .Apparently , toddler one has good socialization skills to the point that he can mingle with other kids even when his parents are around This points to the good relationship that the child is enjoying with his parents . Both his parents encouraged him to play with other children and watched him with other kids . True enough , when the child has strong relationships with his parents , he tends to be more socially responsive and socially amiable . In accordance with Psychosocial theorists , the child is displaying good emotional and social skills because his own relationship with his parents are also good and secure .Otherwise , he might become a re cluse and refuse the company of people (Charlesworth 2003 When Toddler one was playing ball with another child , there was an instance in which the other child managed to grab the ball more quickly than toddler one , so what he did was to forcibly claim the ball from his playmate and withheld it from the latter . Through this , the other child looked as if he was about to cry . It is at this moment that the mother of Toddler one intervened .The mother reasoned out firmly with the toddler in regards to sharing toys so that others would also learn how to share . The tone of the mother appeared to be negotiating instead of imposing . This display of authority on the part of the mother is remarkable and shows the secure connection between her and the child (Charlesworth , 2003 Toddler Two When I felt that I have sufficiently observed toddler one , I decided to turn my attention to another toddler playing with a dog not very far from the first toddler . The only companion of the toddler in the park is his mother and their Labrador .I had the impression , although this is difficult to verify , that the mother was a single parent The mother was silently looking after her child who was playing with the Labrador . Apart from the toy truck and the Frisbee that the child had there were no other toys that the mother had for the child . The mother appeared to be preoccupied with her own thoughts When toddler was not busy with his toy truck , he would play with the Frisbee and the dogs with the strength and the capability that he has The dog seems to act as a guard to the toddler . He does not socialize with other kids very much and he appears content to play by himself .The toddler , it seems is spending most of the time by himself . Although at first glance , this may seem to be a display of autonomy , yet in closer examination of the child , he does not enjoy the benefits that interaction with other kids and with his parent brings . These circumstances will therefore bri ng forth negative consequences in the development of the social skills of the child and he might find it difficult to relate with other people when he grows up (Keenan , 2002 When the child attempts to play farther from his mother , the latter would come after him and tell him not to move around too much .The mother actually uses her authority over the child to forbid him from going somewhere else . Apparently , the mother wants to keep the child in her sight most of the time . This kind of attitude might breed negative feelings in the child and will contribute to the insecurity of their relationship . Since the relationship of the child with his mother is of utmost importance (Charlesworth , 2003 , then his cognitive , emotional and social development will suffer as a consequence . The child also develops a kind of mistrust in the outside world and he will not view the outside world as a safe place .Instead , he might develop the attitude that he always needs his mother to look aft er him . Erikson warned against this over-protectiveness of parents as it prohibits children to explore and become curious of their environment . Hence instead of developing self-confidence and self-esteem , toddler two will instead feel shame and doubt (Franz White , 1985 Toddler two cried when his mother forbade him to wander into the park When the child cried , the mother responded by being firmer and she almost shouted to toddler two to stop . Instead of stopping , however toddler cried even louder and displayed tantrums .At this time , the mother punished toddler two by spanking him three times . After several minutes , toddler two stopped crying and remained where he was instead This display of authority may become inimical to the overall development of the child over the long run as the initiative and the natural curiosity of the child will be dampened and what he will remember most will be the fear associated with the parent ‘s discipline (Charlesworth 2003 Toddler two recovered from the spanking after several minutes by turning his attention to the dog and his Frisbee .By distracting himself , he forgot about the incident and started to enjoy himself again . His mother , however , still issued a warning for him not to move out of her sight ‘ According to Erikson , if the urge of the child to explore is removed , then the result would be a lower level of self-esteem on the part of the child (Franz White , 1985 Toddler two is very much to her mother , however , he is not sufficiently developing autonomy .Through the reprimands and the stern warnings of his mother , he becomes dependent on his mother and unable to explore his environment and his surroundings . Over the course of time as he discovers the world further , he may not have sufficient curiosity and initiative to move away from the familiar and instead , he would keep in sight of whoever is looking after him Conclusion Observing the two toddlers was a good experience for me . It was as if the concepts and theories discussed by Piaget and Erikson were coming to life .Indeed the role of the parents is very crucial in ensuring that a child receives the appropriate socialization and training even while he is young . The strength of the attachment of a child with his parents is very important for him to develop the necessary skills for socialization and in relating with others in his environment If the relationship of a child with his parents is good as demonstrated by the first toddler I observed , then the child will greatly benefit from it .If , however , the nature of the relationship bs on the dysfunctional , then the socialization skills of the child will be negatively affected . As he grows up , he will have struggles in relating with different kinds of people in his environment By observing toddlers , numerous lessons can be gleaned and the nature of the relationship between child and parents will be assessed Accordingly , intervention strategies could be a rrived at so that the child will not suffer needlessly .Furthermore , parents , and everyone dealing with children , should be sensitive to the different levels of development of the child as demonstrated by Piaget and Erikson . By doing so , perhaps the manner of bringing up of children will be better and over the long run , the society will become a better one because of the good rearing of the children Reference Charlesworth , R (2003 . Understanding Child Development : For Adults WhoWork With Young Children . New York : Thomson Delmar Learning Franz , C . E White , K . M (1985 . Individuation and attachment in personality development : Extending Erikson ‘s theory . Journal of Personality , 53 (2 , 224-256 Keenan , T (2002 . An Introduction to Child Development . London : Sage Publications Turner , . J (1991 . Relations between Attachment , Gender , and Behavior with Peers in Preschool . Child Development , 62 (6 , 1475-1488

Symptoms And Treatments Of Alzheimer s Disease - 1592 Words

In 2009, I found out my father was diagnosed with dementia, early onset of Alzheimer’s disease. It was devastating to hear, especially not knowing what to expect, and only having information and ideas based on stereotypical behavior. I am familiar with some of the characteristics of a person living with AD, (Alzheimer’s Disease), however I really do not know what to expect as the disease progresses. My goal with this research paper is to develop my understanding of the disease as a caretaker, and find alternative treatments to go along with his current medical treatment plan. I am interested in finding out what I can do to make him as comfortable as possible, for as long as possible. I would like to develop a treatment plan as a Licensed†¦show more content†¦Ã¢â‚¬ ¢ Stage seven – Very severe, final stage before death. The number of people affected by AD is estimated to be around 4 million Americans and estimated to grow to 14 million by 2050. 1 out of 1 0 people over 65 develop this disease with an increase to almost 50% of Americans over the age of 85. It affects people from all walks of life, including former US president, President Ronald Regan (Borda 13). Treatments of AD range from traditional cholinesterase inhibitor drugs such as Tacrine (Cognex), Donepezil (Aricept), Rivastigmine (Exelon) and Galantamine (Razadyne). Cholinesterase inhibitor drugs affect AD by inhibiting the enzyme acetylcholinesterase. Acetylcholinesterase breaks down into acetylcholine which is essential for memory and cognition. The inhibitor drugs work by slowing the progression of AD, thereby prolonging the patient’s lifespan and mental cognition (Borda 46-52). Two alternatives used to treat symptoms of AD are massage therapy and aromatherapy. The effect of these treatments are considered calming to a patient that may be hostile due to loss of cognition. Not many scientific studies have been conducted on how massage therapy and aromatherapy are beneficial to treating AD patients. There is need for more studies due to the ever changing nature of understanding massage therapy. There seems to be positive results for treating patients in agitated states using stand alone or combined alternative treatments. A relaxing massage can be a