I published “Wharton School’s Certified Investment Management Analyst (CIMA) Course” on @Medium https://ift.tt/38oAawZ
Published: Wharton School’s Certified Investment Management Analyst (CIMA) Course
Behavioral Finance and Irrational Actions Among Investors
Jake Kagele is an established Tucson, AZ, investment professional who guides NOVA Financial Services and provides client-driven asset-allocation strategies. Having completed Certified Investment Management Analyst (CIMA) certification at the Wharton School at the University of Pennsylvania, Jake Kagele undertook intensive coursework that delved into areas such as investment policy and behavioral finance.
Focused on the psychology of market behaviors, the latter topic seeks to find an explanation for actions by investors that often seem to be irrationally grounded. Areas of irrationality include biases and cognitive errors that can lead to subpar decisions, as well as limits to self-control, even when in possession of knowledge that would lead to optimal decisions.
One classic manifestation of such irrationality is “herd behavior” that may be based on rumor and the actions others take, and not reflect the reality of the situation at hand. An example is when news of an imminent corporate lawsuit causes investors to shed shares in a specific company. This then initiates a chain reaction across similar companies in the same industry. Because this happens before any action or judgment has been rendered, it is a market movement with imperfect knowledge as a basis.
The positive aspect of this is that savvy investors can often take advantage of others’ herd behavior to identify undervalued stocks and find long-term strategies for outperforming the market.
Published: An Overview of the Wharton CIMA Program
I published “An Overview of the Wharton CIMA Program” on @Medium https://ift.tt/2VlCpOs
Cash Holdings as an Element of a Diversified Portfolio
Serving the needs of Tucson, AZ, clients, Jake Kagele leads NOVA Financial Services and provides tailored advice that meets the needs of individuals, trusts, foundations, and corporate entities. One area that Jake Kagele has extensive knowledge in is designing an allocation strategy that is properly diversified.
A recent CNBC article brought focus to the importance of cash holdings within a portfolio mix, particularly during times of high volatility. One aspect of this involves setting aside an emergency cash savings account that will cover all foreseeable expenses over a three-to-six-month period.
For those who have retired, another element is maintaining investments totaling two to three years of income, in holdings that are not subject to loss of value through exposure to the securities markets. Cash accounts are often a major component of this type of allocation.
While cash holdings may eliminate many short-term risks, they do not mitigate the steady erosion of capital due to inflation and cost-of-living increases. For those with a long-term perspective, the stock market should be a central focus, as it has historically always headed in a higher direction, whatever the short-term headwinds, and surpassed previous records. The moment when average investors have dialed back equity holdings and moved to safe havens such as cash may indeed be the best time to purchase stocks for value.
Jake Kagele (AZ) 