Your 1-Week Roadmap to the Highest Return

 


The previous Section addressed the scientific aspect of financial fundamentals in a quantitative way that is easy to follow. This aspect of finance is a solid place to start and should not be ignored. In addition, you can read books, articles, blogs or take an in-depth investment course that deals with advanced financial ideas beyond the scope of this guide (see Resources). Once you know what works in the market, let’s come up with a simple portfolio plan implemented as a roadmap and checklist that work for you.

Warren Buffett once said that “An idiot with a plan can beat a genius without a plan”, and so the ultimate goal of this guide is to outline a sequence of key steps to get ready to invest by developing a financially attractive and risk aware investment plan. This leads to the following 1-week sequence of steps:

Day 1: Preparation Phase (Workspace Setup)

This is about selecting the appropriate investment platform and exploring investor online databases, stock APIs and related investing data sources that can help you create investor lists based on industry, investor type, etc. The key question to answer is what’s the best platform for me?  

Day 2: Stock Data Analytics (Crunch the Numbers)      

This step aims to study, construct and evaluate investment BI  strategies in order to understand both current and future stock exchanges. Market data mining techniques will be used to evaluate past stock prices and acquire useful knowledge through the calculation of some financial indicators mentioned earlier.

 

 

Day 3: Max(Return) (Double Your Money)    

This is a maximum return brain storming session in that you need to find all possible ways to maximize your potential returns for a given level of risk or volatility. Always measure returns in risk-adjusted terms. When we measure returns, there are three approaches: the absolute point-to-point returns; benchmarked returns, either to the peer group or to the representative index like the Nifty; risk-adjusted returns. The latter is the most appropriate approach and a key takeaway point of this guide. Indeed, measures like Sharpe/Treynor can help you measure how much returns will be generating without adding to your risk. Your ultimate aim must be to maximize your risk-adjusted returns on your investments.

Day 4: Min(Fees) (Zero-Fee Trading Path - “Different Strokes for Different Folks”)    

Here, the goal is to minimize/eliminate both the visible and hidden costs in your investment portfolio. The challenge is that numerous fees associated with the investment journey are often multidimensional and not always as transparent as they could be [71]. You need to understand all the costs associated with your investment reserves as well as the services being provided.    

Day 5: Min(Risk)/Max(Return) (Risk/Return Trade-Off - “No Risk, No Reward”)  

The risk-return trade-off is the crux of the matter as the potential return rises with an increase in risk. In fact, invested money can render higher profits only if the investor will accept a higher possibility of losses. Based upon the outcome of Days 1-4, the objective is to accept only the largest expected return at a well-justified level of risk.

Day 6: Resilient Exit/Recovery   

In addition to conservative buy-and-hold strategies, Agile investors (long-term winners) always foresee early warning signs [1] to develop and implement multiple resilient exit/recovery mechanisms. It is very important to know both how/when to enter and exit a stock. This is also the right placeholder to develop an effective investment recovery plan to optimize internal redeployment of your portfolio.  How can you recover maximum value from the idle/surplus assets? A solid plan may include addressing identification, audits, sales, transfers or closures of your securities [72].        

Day 7: Final Investment Decision (FID)

Based upon the outcome of Days 1-6, you should begin the Final Investment Decision (FID) process. The objective is to choose a subset of potential products that maximize profits and minimize costs/fees while respecting the budget restrictions (constraints) and associated risks [73]. At the final stage, I would suggest paying special attention to uncertainties inherent to your diversified portfolio.    

Bottom Line:  

In this Section, I’ll take you through these components to consider when creating your portfolio roadmap (and will review what oversights to avoid). I will walk you through all of the strategic steps to get to a finished product roadmap and beyond. My goal is to provide a clear and persuasive case for building the product the way you ask for it to be built. So let’s discuss every step in detail.

Comments

  1. Day 1: Preparation Phase (Workspace Setup)
    Day 2: Stock Data Analytics (Crunch the Numbers)
    Day 3: Max(Return) “Double Your Money”
    Day 4: Min(Fees) - “Investment Fees Matter”
    Day 5: Risk/Return Trade-Off - “No Risk, No Reward”
    Day 6: Resilient Exit/Recovery – Agile Approach
    Day 7: Final Investment Decision (FID)

    ReplyDelete
  2. That’s about it. Some things may sound obvious at first, but it’s always better to be overcautious, rather than miss something.

    ReplyDelete

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