Risk and the Smart Investor

Erscheinungsjahr 2010
ISBN: 978-0-07-174349-5
Verlag: McGraw-Hill Education

Buch, Englisch, 288 Seiten, Format (B × H): 163 mm x 236 mm, Gewicht: 558 g

Master the most important investing skill of all—DECISION MAKING“De-risking your investmentsrequires knowing that there ismuch you don’t know.”
–David X MartinRisk exists because of one simple fact:Decisions are always based on incompleteinformation. Therefore, to meet your investmentgoals over the long term, you mustlearn to manage the risks associated with adecision-making process that is by natureflawed. Risk and the Smart Investor provides aframework for making such decisions.Avoiding unrealistic promises of completelyrisk-free investing, world-renownedrisk management expert David X Martinfamiliarizes you with the principles of riskmanagement. Based on Martin’s experiencein managing risk at several of the world’slargest financial institutions, this principlebasedapproach presents a unique perspectivethat helps you manage the risk in everyinvestment you make.Risk and the Smart Investor provides notonly a framework for managing risk in today’smarkets, it also prepares you to handlethe next financial crisis—which is coming,sooner or later—by separating risk managementinto four separate processes: - Assessment—know where you are,but accept the fact that you cannotknow everything - The Rules of the Game—determineyour appetite for risk, diversifyaccordingly, demand transparency,and institute checks and balances - Decision Making—consider allalternatives, fit your plans into specifictime frames, and always have anexit strategy - Reevaluation—continually monitor theoutcomes of your decisions and learnfrom your mistakesPraise for Risk and the Smart Investor “Interesting and instructive. A good book for those who want to learn about risk and build this knowledge into their financial decisions.”
—John Reed, former CEO, Citigroup“David Martin has produced a popular yet serious post-financial crisisreflection on the fundamentals of risk management as a living process. Rich inexperience and wisdom, Risk and the Smart Investor is both a useful handbookbrimming with insights, and a moral tale for our times. Simply a must-read forevery serious investor, risk manager, and just about everyone else.”
—Michael Power, professor,London School of Economics and Political Science“David Martin knows risk and the active investor and his book proves it.”
—Jerry Lieberman“This book is like having your own mentor to guide you throughrisk management decisions.”
—William Rhodes, Chairman, Citigroup and Citibank

Autoren/Hrsg.

Martin, David

Fachgebiete

• Wirtschaftswissenschaften Finanzsektor & Finanzdienstleistungen Anlagen & Wertpapiere

Inhaltsverzeichnis

Book Table of Contents—Overview Before the Principles – Set up of the risk principles, decision framework and examples of how they are applied.Section I - How to assess the situation you are in or the decisions you need to make

Principle 1 – Check emotions at the door, know where you are – understand the facts of the situation, not the hype, check emotions at the doorPrinciple 2 - Know what you don’t know – question the assumptions you make, it is better to make a wrong decision than to have been oblivious, the inevitable unfolds
quickly
Principle 3 - Risk is measured & managed by people not mathematical models, important to understand change/inflection points

Section II - Know the rules of the road and how to create the best possible outcomes

Principle 4 - There is no return without risk – know your own risk appetitePrinciple 5 - Be transparent – risk should be fully understood and discussed openly
Principle 6 - Diversify – multiple risks will produce more consistent rewards
Principle 7 - Checks and balances are good
Principle 8 - Recognize that risk is not an epiphany, it involves blocking and tackling
every day
Section III - How to make the right decisions

Principle 9 - It is better to be approximately right, than to be precisely wrong
Principle 10 - To be effective – risk is everyone’s responsibility in the decision-making
process, need to be independent
Principle 11 - Understand the importance of your reputation, be mindful of who you are
doing business with
Principle 12 - Fit your decision-making into specific time frames and keep in mind that
your desires may change

Section IV - What tools should I use?Principle 13 - Scenarios help you visualize plausible but unusual outcomes from different
decisions
Principle 14 - A decision weighting matrix will help you quantify what’s on your mind
Principle 15 - Create tripwires to manage the situation and not be lulled into inactivity

Section V - How do I assess that I made the right decision?
Principle 16 - Know your boundaries; stay in the lane, if you are unsure, ask, re-invention
is good
Principle 17 - Monitor the outcomes, continuously reassess
Section VI - It’s important to learn from your mistakes
Principle 18 – Internalizing bad decisions and reflect on how you can optimize current situation

Über Autor(innen)

Martin, David
David C. Martin is Professor of Management and Human Resource Management at Kogod College of Business Administration at The American University. Professor Martin has been recognized as the Kogod College of Business Administration Teacher of the Year, Faculty Administrator of the Year, Teacher-Scholar of the Year and the Scholarship/Researcher of the Year.

David X Martin is senior vice president for AllianceBernstein, which has more than $450 billion in assets under management. Formerly chief risk officer atAllianceBernstein, he also has held senior risk management positions at Citibank. Martin was founding chairman of theInvestment Company Institute's (ICI) Risk Committee and has lectured at the graduate schools of business at MIT, Columbia University, and NYU. He has written articles forThe Bankers Magazine, the journal Pension & Investments, and the AEI-Brookings Joint Center Web site. He and his family live in the greater New York metropolitan area.