1. Debasis Chakraborty - International Business School Investment Strategy
Introduction
The essays is based on numerous financial data , various research data, statistics and market
research for last few decades and the objective is to carry out a deep analysis with respect to
current complex financial environment and produce an attractive future investment strategy
,approach and solutions.
I have analysed and considered all the available resources such as statistical and historical
data, current market situation, political complexity, financial regularity and risk policy in US,
Europe and APAC. Investment is complex stuff in current complex economic situation where the
GDP growth is very low i.e. <2%. GDP is derived as, GDP = Consumption + Investment +
Government spending + (Exports – Imports).
Executive Summary
Investments are influenced and/or govern by four critical factors inflation, deflation, economic
expansion and contraction. And as the economy is changing rapidly, controlling these factors is
really unpredictable. Investment is the individual’s chaise, the factor which drives for an
investment plan and strategy is risk, how much risk we can take forward.
Investment Strategy
The investment strategy is based on inflation protection, equity recovery, emerging market
growth, quality defence and the hunt for yield. In the following sections I will discuss more
details on the various investment strategy and attractive options available. The most important
part to the investor is to carry out the proper valuation before buying and investing in the market.
Attractive Investment Options and Analysis
In next sections I will discuss various attractive investment options available in the market such
as dividend stocks, stocks, infrastructure bonds, real estate, paying off debt, investment on
property and infrastructure, global equities and emerging markets.
Dividend Stocks is an attractive option, but we need to understand the deeper in to the various
dividends such as cash dividend, property dividend, stock dividend, liquidity dividend etc.
Research says that dividend stocks are more preferable as it is relatively risk free. Even Warren
Buffet has also suggested that Dividend Stock is most attractive in current complex economic
situation. Similar research suggests that the investing in to the Securities could be the best long
term strategy. Following are the six types of dividend investing strategies along with a portfolio
based on each strategy
• Income Investing (High / Very high current yield; lower DGR)
• High Growth Investing (High / Very high DGR; lower current yield)
• Long Term Growth Investing (Mid-range current yield; mid-range DGR)
• High Yield Investing (Very high current yield; lower DGR)
• Income Through Funds Investing (Very high current yield through funds)
• Dividend Diversity Investing (A combination of the first four types)
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2. Debasis Chakraborty - International Business School Investment Strategy
Overall, if we are holding any stock indefinitely it doesn't matter whether the return comes from
the current yield [CY] or the growth rate of the dividend [DGR]. The overall return is calculated
based on the sum of the two. This is a version of the Gordon Growth Model which states
Value [of the stock] = Dividend in $/ (required % return - dividend % growth rate).
We have illustrated the profitability of Dividend stock in the reference Graph1 to Graph 3.
Overall dividend yield and growth in dividends, along with quality and value investment criteria,
are at the centre of the investment process of the select Equity and Progressive Yield portfolios.
Investing on MNC Stocks is another attractive investment option. The stock is risky and the best
way to invest in the stock is to find out the band value, sustainability and past repudiation. IBM
share has been increased four times in last eight years, Apple share has been increased 10
times in last 10 years are few classical examples. S&P 500 stocks are very attractive for
investment. Big IT and Oil/Gas/Energy stock are more preferred stock, but investment banking,
insurance stock is very attractive, even if financial stocks are in high Risk portfolio.
Infrastructure Bond is also very attractive investment at growing economy, especially in the
emerging market [Graph 7 & Graph 8]. Investing on real estate also a good option and property
values are increasing and there is a growth expecting in infrastructure portfolio such as building
and highway construction, construction of bridge and setup new rail tracks.
As interest rates are going up and up, the paying off of debt is another smart option. Global
equities also a smart option and research says that investment on the emerging market.
Buying Gold is another good option as we have observed a huge increased on gold price in last
decades [Graph 6]
Recommendation and Conclusion
After last couple of year’s recession, US economy is in track [Graph 9] where as European
economy is still struggling because of economic crisis in Greece, Portugal and Spain, but the
encouraging fact is that UK, Germany and Nordics economy is coming in right track. Still it is very
complex and difficult to predict the future market condition here and high number of country has
lower industrial production rate and lo GDP. We have discussed various attractive investment
options based on their risk portfolio. A healthy cash-flow is important part of in the business.
There are various options as we discussed above and it is up to the investor to find out the right
place to invest. Therefore investor is required to do a complete study on market before investing
on various options available.
Acronyms: DWR: Dividend Growth Rate GDP: Gross Domestic Product
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3. Debasis Chakraborty - International Business School Investment Strategy
Graph and Financial Chart Graph and Financial Chart
Graph 1
Graph 2
Graph 3
DG is Dividend Growth, DR is Dividend Reinvestment ,
NF is New Fund
Graph 4
Graph 5
Graph 6
Best Investment Strategy
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4. Debasis Chakraborty - International Business School Investment Strategy
Graph 7
[Emerging Market Comparative Benchmark Returns]
Graph 8
Graph 9
Graph 10
Graph 11
Long Term investment strategy
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