Apollo Global Management, Inc.’s Post

Capital markets have entered a new regime of higher volatility that can create attractive opportunities for investors who add flexibility to private credit portfolios. We see attractive opportunities in private corporate credit, asset-backed finance, and dislocated credit. Read the latest whitepaper from Apollo’s Global Head of Credit Product for insights into the potential benefits of flexibility.

The Two Big Strategic Mistakes That Investors Make According to the research by Rawley Heimer, Zwetelina Iliewa, Alex Imas, and Martin Weber, people tend to start with a strategy of stopping when they’re losing and continuing when they’re winning while betting at a casino or taking on risk in the stock market. However, in reality, they do just the opposite. Once they experience a win, they tend to cash out early, and when they experience a loss, they tend to keep gambling. This behavior leads to investors leaving money on the table by bailing when they’re winning and piling up losses by sticking with bad bets. A good investment strategy is a plan designed to help individual investors achieve their financial and investment goals. Your investment strategy depends on your personal circumstances, including your age, capital, risk tolerance, and goals. Investment strategies range from conservative to highly aggressive, and include value and growth investing. For example, a conservative investment strategy might involve investing in bonds or other fixed-income securities, while a highly aggressive strategy might involve investing in emerging markets or other high-risk, high-reward opportunities. Creating a successful, sustainable investment strategy means being able to describe, communicate, and write out your process. Effective investors have beliefs about why markets function as they do, and strategies for how to exploit those beliefs for profit. It’s important to choose a strategy that suits your risk tolerance, financial situation, and long-term goals. You should also reevaluate your investment strategies as your personal situation changes. Keep in mind that there is no right way to manage a portfolio, but investors should behave rationally by doing their own research using facts and data to back up decisions by attempting to reduce risk and maintain sufficient liquidity. In conclusion, investors should be aware of the common mistakes they make while investing and should choose an investment strategy that suits their personal circumstances. They should also be prepared to reevaluate their strategies as their personal situation changes. By doing their own research and behaving rationally, investors can reduce risk and increase their chances of achieving their financial and investment goals. Source : Brabaw, Kasandra. "The Two Big Strategic Mistakes That Investors Make." CBR - Finance, December 18, 2023. Accessed January 9, 2024, from Chicagobooth.

Here is the next question of pre examination test of cs executive examination How Do You Calculate Return on Investment (ROI)? Return on investment (ROI) is calculated by dividing the profit earned on an investment by the cost of that investment. For instance, an investment with a profit of $100 and a cost of $100 would have an ROI of 1, or 100% when expressed as a percentage. Although ROI is a quick and easy way to estimate the success of an investment, it has some serious limitations. ROI fails to reflect the time value of money, for instance, and it can be difficult to meaningfully compare ROIs because some investments will take longer to generate a profit than others. For this reason,professional investors tend to use other metrics, such as net present value (NPV) or the internal rate of return (IRR).

Understanding risk is paramount in the world of finance. Consider this: Every investment carries a level of risk, from index funds to more speculative ventures. Moreover, it's crucial to recognize that lower-risk investments can still yield high rewards—it's not an either-or scenario. Balancing risk and reward is a nuanced art. Here's a valuable strategy: Before speculating, ensure you have a robust foundation of at least 10 data points to justify your decision. This disciplined approach can mitigate unnecessary risks and enhance your investment outcomes.

This recent paper advocating for a 100% equity allocation overlooks established principles of diversification and modern finance. Its argument, based on historical equity outperformance, ignores the complexities of risk and overlooks the benefits of a diversified portfolio. Leveraging and adjusting portfolio weights are considered more rational approaches

The private credit asset class has gained prominence and evolved considerably post-financial crisis. In this white paper, we introduce the asset class and address the types of questions institutional investors would be likely to ask when considering an investment in this area. We provide an overview of private credit, the unique characteristics of the asset class, an analysis of major return, risk, implementation considerations, and more. Read the full paper here: https://lnkd.in/eBh-6iC2 Disclaimer: https://bit.ly/3hJJP7G #InstitutionalInvesting #PrivateCredit

An important determinant is what your goals are and what is the priority and importance of achieving them. A robust investment plan can place the life you want within your reach.

Macaulay Duration – A confusing concept... One of those concepts where calculation is taught.. But not many understand the actual relevance of this. Let us decode this in simple terms. Save this post for future reference. When we invest in a bond – we basically face 2 major risks (in addition to default risk ofcourse!) - Interest Rate Risk - Reinvestment Risk Both these work in opposite directions. Why? Let’s take a 10 year bond with a coupon rate of 8%, and Face Value of Rs 100. If interest rates go up – this would result in Yields going up, and this would cause Bond Prices to go down. An investor will lose money due to Yields going up. But remember, every year you get a coupon. That can be now reinvested at higher rates, since rates have gone up. So the investor will make extra money on higher reinvestment rates. If rates go down, investors will gain on bond prices, but lose money on reinvestment. Thus you see, interest rate risk and reinvestment risk work in opposite directions. Now conceptually, Macaulay Duration is the point, where these risks basically neutralize each other. That is, if the Mac Duration of a bond is 8 years, and you hold it for 8 years, whatever happens to the interest rates, your interest rate risk will be neutralized by higher or lower reinvestment return. The concept is used by investors to match their investment horizon with the Macaulay Duration of their bond portfolio, so as to ensure that the risks are minimized as much as possible. This is of course a simplification, since the Mac Duration of a bond portfolio has to be optimized in a dynamic manner, as interest rates keep changing. ----- Peeyush Chitlangia, CFA I help in decoding complex finance concepts. Do go through some of my earlier posts, you may find them useful.

The importance of financial planning and investing has been emphasized, and the need to build wealth over time to increase wealth. What I was able to learn: ▶ Know the importance of consistency and patience. ▶ The secret of stored interest and long-term investment. ▶ Learn the importance of skills and financial stability before buying a home. ▶ Make a careful financial and investment plan. ▶ Focus on the importance of personal finance and investments. Besides these things, I was able to understand the importance of financial planning and intelligence to build wealth over time. Do not be lured by immediate results, but achieve success with regular practice and qualified investment. https://shorturl.at/nZeYz Deven u Pandey Sanjay Kathuria, CFA

Interest rate ⬆️ —> yield ⬆️ —> PV or Bond Price will be ⬇️, vice versa. But, once you get coupon —> the coupon could be reinvested in higher rate —> receive extra money from here, vice versa. The most highlighted concept from this macaulay duration : Now conceptually, Macaulay Duration is the point, where these risks basically neutralize each other. That is, if the Mac Duration of a bond is 8 years, and you hold it for 8 years, whatever happens to the interest rates, your interest rate risk will be neutralized by higher or lower reinvestment return. Thanks, Before reading this, I only can calculate the macaulay duration without knowing the concept of macaulay duration really well.