Your MBA Portfolio
Your MBA Portfolio - A look inside one of the MBA courses I created and taught at Royal Roads University. Investment and Portfolio Management 672 (4 credits.)
The course studied / reviewed six research papers
- Active versus passive investing
- Asset class returns – historical and expected
- Study of three institutional investment plans
- Love / Hate / Ignore – stock picking
- The psychology of investing
- Dr. Nussbaum – The Portfolio Review
Over the many years the research conducted by the MBA students concluded:
1) Capital markets are relatively efficient at pricing risk and return.
2) Asset class returns are random over shorter time periods and historical and expected returns of equities relate to their cost of capital (risk of capital).
3) Asset Allocation should be global
4) The three Institutional plans studied are prudently diversified, low cost, and primarily capture asset class returns with broad based index or asset class pools.
5) Stock picking can be viewed as a “scratch and win”. One of the problems students experienced was the more they researched a company the more they defended their reason for investing in it.
6) The paper on psychology was the among the students favorites. They found that investors are not rational and investor fear and greed is preyed upon by the media and the investment community.
7) Asset allocation is everything. Asset class capture is everything else. Psychology is what keeps it together.
(Asset class capture refers to the ability of the investment vehicle or fund to capture the returns of the underlying asset class. The more technical term is to minimize tracking error)