Anh T. Nguyen
Doctoral Candidate in Finance at Hanken
Worked as a Finance manager at the world largest elevator firm, best performing equity fund in Europe and entrepreneur
Three MSc in Finance and CEMS MiM at Aalto
Location Finland
Activity
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Hello @AntonRublevskyi,
Indeed, the generally accepted relationship between asset and expected returns is positive. The more risk is taken, the more returns is expected to compensate for the risk taken.
In the framework of modern portfolio theories, beta is the factor loading in the regression that estimate the sensivitity of stock returns to the...
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Hello @JohnEvans ,
It varies depending on the service provider and countries. Actively managed funds are more expensive than ETF.
For developed markets, for mutual fund, I would say usually in range 1% to 3%. For ETF, usually fee is lower than 1%.
For example, this fee is being offered by a Finnish bank to corporate customer for mutual fund...
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Hello @AntonRublevskyi ,
Yes, there is not really a bullet proof risk free investments, but asset with the lowest probability of default can be argued to be the US government bond/bill as you said.
Best regards,
Anh Nguyen -
Anh T. Nguyen replied to Anton Rublevskyi
Hello @AntonRublevskyi ,
Glad that you are learning!
Indeed, stock, bonds, cash, real estates are amount the most commonly held asset classes. Traditionally, pension funds of countries can allocate capital i.e. up to 60 percent of investment in stocks and 40 percents in bonds, depending on timeframe and market situation.
Best regards,
Anh Nguyen -
Anh T. Nguyen made a comment
Warmly welcome to join the course Principles of Wealth Management fall 2024!
You can embrace the new knowledge and discuss your thoughts with your peer learners along the way. Let's keep the playground fun!
We love to see you learn!
Anh Nguyen
On behalf of course team -
Hello @JuanMateoBorreroBrauer ,
Simply put, volatility is the finance term derived from the statistic term, standard devation or the square root of variance (check the formula). Loosely speaking, you can understand volatility as the average distance from the average value. It measures how the data points fluctuate around the average point. So it helps you...
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Hello,
Fee is an important expense from investing services in the market. Generally, ETFs offer lowest fees to invest in the whole broad-based market indices. The more active the fund is, the more fee is charged. As mentioned in the course material, the fee can erase your return over time. Therefore, it needs to be considered carefully in investment...
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Anh T. Nguyen replied to Andrew D
Risk Premium is generally the rewards for taking a risk, such as equity risk premium. The concept is well established and has long been researched. For example,
https://www.journals.uchicago.edu/doi/abs/10.1086/258467?journalCode=jpe
Keep learning!
Anh Nguyen -
Hello @JuanMateoBorreroBrauer ,
As in the material, when correlation is plus one, there is no diversification benefit. Mathematically, the portfolio standard deviation become the weighted average of standard deviation of individual assets. When the correlation is minus one, the most diversification benefit is achieved.
In practice, assets do have...
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Anh T. Nguyen replied to LINDA SANG
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Anh T. Nguyen replied to William Rice
Hello,
When supply is more scarce, price increases. This is the cornerstone economic concept of price equilibrium where supply must equal demand.
Recent increase in prices or weaker purchasing power of money a.k.a inflation is also caused by the disruption in supply chain. For example, when there is a lack of energy or food supply, these commodity...
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Anh T. Nguyen replied to Andrew D
Hello @AndrewD ,
Quantitative easing is one of the methods to help pumping money into the market by buying assets from market i.e. bonds. By making money cheaper, it is easier to borrow money to boost consumption for example to boost the economy back to growth from i.e. recession. As said in the material, inflation target is about 2% set by the ECB.
More...
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Anh T. Nguyen replied to Elle Rees
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Anh T. Nguyen replied to Qi Miao
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Hello @JuanMateoBorreroBrauer ,
Accounting information is one of the inputs for valuation in many well accepted valuation models for equity pricing. However, the world of finance has developed many more valuation models in addition to those.
Best regards,
Anh Nguyen -
Anh T. Nguyen replied to Elle Rees
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Hello @JuanMateoBorreroBrauer ,
It is a good idea to understand what you are investing in and the cost that comes with it. Prospectus is an important document to read, for example.
Best regards,
Anh Nguyen -
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Anh T. Nguyen replied to Вадим Дубенко
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Anh T. Nguyen replied to Magdy Ishak
Hello @MagdyIshak ,
Risk aversion is one of the key concepts in Finance that we researchers integrate into various well-known financial models.
Keep learning!
Anh Nguyen -
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Anh T. Nguyen replied to Andrew D
Hello @AndrewD ,
Return is measured as the percentage change in price or change in the valuation outcome. For example, there is information change that investors decide that the asset is more valuable now that it was before. Or the other way around.
Best regards,
Anh Nguyen -
Anh T. Nguyen replied to Andrew D
Hello @AndrewD ,
Higher risk is ''expected'' to be compensated by higher returrns. Under such condition, investors enter into the investment.
Best regards,
Anh Nguyen -
Anh T. Nguyen replied to Ishfaq Shah
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Anh T. Nguyen replied to Tobias Falkehed
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Anh T. Nguyen replied to Andrew D
Hello @AndrewD ,
Return definition is here: https://www.futurelearn.com/courses/principles-of-wealth-management/4/steps/1798676
Returns are calculated from the percentage change in price of assets. So when the valuation changes due to i.e. to information coming in, prices change. This change embodies the the positive or negative returns.
Best...
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Anh T. Nguyen replied to Andrew D
Hi @AndrewD ,
There are many types of risks. The risk measures are also different across difference asset classes. As in the video, if we know the distribution of the returns well, i.e. normal distribution, the risk can be measured as variance or standard deviation. Yet, in practice return distribution is not normal. One can however assume that when the...
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Welcome!
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Welcome to the course!
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Anh T. Nguyen made a comment
You could introduce yourself to your co-learners and discuss freely your thoughts here!
Anh Nguyen
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Anh T. Nguyen made a comment
Welcome to the course in September 2023!
Anh Nguyen
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Anh T. Nguyen replied to Karolina Krawczyk
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Anh T. Nguyen replied to Cyril Dary
Hello @CyrilDary ,
You can learn at your own pace. But of course, it is good for you to have a steady speed to get momentum of your knowledge.
Anh Nguyen
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Anh T. Nguyen replied to Gidalte Lucio
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Hello @GeorginoKalengTshikwand ,
The insurance premium is different for different buyers. Those with higher risk profile pays higher insurance premium. That make sense?
And, in principle, as long as there are large enough buyers, the compensation is smaller than the money insurance companies pool together.
In modern times, this business model still...
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Anh T. Nguyen replied to Malin S
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Anh T. Nguyen replied to Cyril Dary
Hello,
Try another time?
Hint: Commission is not an exchange
Anh
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Hello @JaniceCourtney ,
Welcome to the course!
Anh Nguyen -
Anh T. Nguyen replied to R M
More about trading on expectation, I find an interesting article for you on Journal of Finance
https://onlinelibrary.wiley.com/doi/10.1111/j.1540-6261.1996.tb05223.x
Best regards,
Anh Nguyen -
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Raising interest rate makes it more expensive to borrow money from banks, for example, making money more expensive. It is one way to control inflation. However raising interest rate also may hamper economic growth as people are more reluctant to borrow money to invest in businesses.
Best regards,
Anh Nguyen -
Hello @FarzanaSiddique
In fact wealth management is a large scale business where instutionalized investors manage the large amount of wealth on behalf of clients. To name a view, the Norwegian Pension Fund is the largest sovereign fund in the world.
Best regards,
Anh Nguyen -
Anh T. Nguyen replied to Farzana Siddique
Hello @FarzanaSiddique ,
As history shows, managing well functioning financial markets has a huge impact on society, i.e. the well being of people, their security and life time saving, among others.
Financial policies therefore have huge significance in societies.
Best regards,
Anh Nguyen -
Anh T. Nguyen replied to Farzana Siddique
Hello @FarzanaSiddique ,
Stocks and bonds have been traditional asset classes invested by i.e. most conservative investors such as pension funds. There are many other asset classes that have different risk and returns profiles. You can learn some of them in this course.
Keep going forward!
Anh Nguyen -
Keep on learning @FarzanaSiddique !
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Anh T. Nguyen replied to Farzana Siddique
Hello dear,
Please check lecture on bank run.
https://www.sciencedirect.com/science/article/abs/pii/S0304405X16301076
Best regards,
Anh Nguyen -
Hello @FarzanaSiddique ,
Lending at higher rate than deposit rate is the key business of bank. You have learnt a lot about banking business. Keep on learning.
Best regards,
Anh Nguyen -
Hello @IsraëlThierryMayidimaLemandi ,
Utility functions are being studied by researchers. How much joy you get from consuming vs. i.e. postponing are taken into account when optimizing utility under constraints.
Keep learning!
Anh Nguyen
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Hello @IsraëlThierryMayidimaLemandi ,
Indeed, there is no investment that is risk free. The most safe and therefore relatively low expected return investment is perhaps a loan to US government i.e. 10 year government bonds.
Best regards,
Anh Nguyen -
Hello @MBM.rin ,
Exchange traded funds or ETFs, track indices of various markets, investment strategies, depending on the investment preferences of investors. Most typical example is a market broad-based fund that tracks the whole stock market and gives investors the exposure to returns of the whole market, at a relatively small fee.
Best regards,
Anh... -
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Hello @JohnGrisi ,
Era of negative in US has ended the first ever experiment of negative interest rate. Raising interest has been a way to fight inflation, making asset cheaper. Discount rate across asset classes rise and therefore the discounted cash flows are smaller in value.
Raising interest can curb growth. Therefore, interest rate cannot be raised...
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Hello @MBM.rin ,
There are many asset classes the offer investment opportunities to investors. Traditionally, stocks and bonds have been used in 60/40 Bond/stock portfolio of very conservative investors i.e. pension funds.
Additional asset classes i.e. real estate as among the largest asset classes, gold, art, digital assets have been added and so...
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Anh T. Nguyen replied to MB M.rin
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Anh T. Nguyen replied to MB M.rin
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Hello @ChoudharyIslam ,
Investing requires a holistic approach usually, meaning taking into account many factors. From there, one can for example prioritize which factors are more important than others.
Best regards,
Anh Nguyen -
Anh T. Nguyen replied to John Grisi
Hello @JohnGrisi ,
Index funds track market index and allow investors to invest in the whole market even. The cost is also lower than active or strategy funds. Its return per year is lower than many active funds. It comes to the issue of investment preferences of investors. Some people seek for higher returns and higher risks.
Best regards,
Anh Nguyen -
Anh T. Nguyen replied to John Grisi
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Hello @MercyFashanu ,
Younger investors tend to have more risk tolerance. Investors have different time horizon, risk aversion level, etc. and therefore seek to optimize returns within their contraints.
Best regards,
Anh Nguyen -
Anh T. Nguyen replied to Ngbede Janet
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Hello @JacquelineLouw ,
Remember the concept of expectation and reality. One would sensibilty expect higher returns in compensation for higher risks. Whether this expectation realizes or not is another thing.
Best regards,
Anh Nguyen -
Anh T. Nguyen replied to JAVIER AF
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Anh T. Nguyen replied to R M
Hello @RM ,
Risk tolerance of people are different. You are right. There are extremely risk taking people out there. Borrowing money is an obligation to pay back for "sure". Whether you have positive returns on your investment is not for sure. Then comes the concept of expected value, which takes into account probability multiplied by absolute value. This...
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Anh T. Nguyen replied to R M
Hello @RM ,
There are many categories of market, developed, developing, emerging, frontier market etc. Investment banks i.e. Morgan Stanley, Goldman Sachs etc. track these indices.
Best regards,
Anh Nguyen -
Anh T. Nguyen replied to Dan Prior
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Dear @JohnGrisi ,
The January has been well studied.
"Stock prices tend to rise in January, particularly the prices of small firms and firms whose stock price has declined substantially over the past few years. Also, risky stocks earn most of their risk premiums in January."
Remember that when the anomaly is well studied, it can disappear already...
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Anh T. Nguyen replied to John Grisi
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Anh T. Nguyen replied to Yuan-Ping Lai
Hello @Yuan-PingLai ,
Market becomes more efficient when market prices reflects information more accurately. More market participants and liquidity can be argued to increase market efficiency, but can also create more noise.
For reference, recent research on data and market efficiency, please refer to...
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Hello @JohnGrisi ,
Marketing timing is a critical issue in investment and has been well studied in academic research in as early as the 70s.
For reference, https://www.jstor.org/stable/2326944
Best regards,
Anh T. Nguyen -
Hello @n'nancocquotchrystellekouassi ,
The higher the risk, the higher returns is expected to compensate for that risk. Otherwise, why do you bother?
Expectation and realities are different concepts. Realities do not always converge to the expectation. So, there come the concept of probability.
Best regards
Anh T. Nguyen
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Anh T. Nguyen replied to John Grisi
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Anh T. Nguyen replied to Tara Gunn
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Hello @n'nancocquotchrystellekouassi ,
As mentioned in the above video, Dr. Björn Wahlroos also thinks there is a myth about gold as an investment asset class. But gold has been traditionally been considerred a safe haven.
In our modern days, the new modern tech has given rise to many other investment instruments. It remains to be seen their role to be...
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Anh T. Nguyen replied to Rob Whitlock
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Anh T. Nguyen replied to John Grisi
Hello @JohnGrisi ,
As mentioned,
There is the powerful effect of compounding. "Even though the timeframe has just 2.1-folded from 30 to 63 years, the end-of-period wealth has 12.7-folded. "
But in practice, it is difficult to achieve i.e. keeping the money in investment account for such a long time, maintained the mentioned 8% return per year...
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Hello @Yuan-PingLai ,
To be more accurate, higher risks are expected to be compensated by higher returns.
Best regards,
Anh T. Nguyen -
Anh T. Nguyen replied to Rasmus Ek
Hello @RasmusEk ,
In financial market, money making ability depends a lot on the market timing skills of portfolio managers.
Best regards,
Anh T. Nguyen -
Anh T. Nguyen replied to Thu Thảo
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Anh T. Nguyen replied to Yuan-Ping Lai
Hello @Yuan-PingLai ,
As mentioned in the course material, cost reduction and the time effect have signicant consequence on the end of period wealth.
Stay tuned!
Anh T. Nguyen -
Anh T. Nguyen replied to John Grisi
Hello @JohnGrisi ,
Later in the course, you will find info, Q&A on gold as an investments. Gold itself does not create anything. But, it is valued by large enough amount of people. So, traditionally gold has been a safe haven. Nowadays, there are much more asset classes to invest in.
Stay tuned! Keep going forward!
Anh T. Nguyen
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Hello @Yuan-PingLai ,
Just to be clear,
5% of equity premium, the outperformance of equities over bonds, is generally accepted as said by Dr. Björn Wahlroos.
Anh T. Nguyen
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Anh T. Nguyen replied to R M
Hello @RM ,
It is true. If inflation is too high, real returns are eaten up.
Nominal returns = Real return + inflation (rough approximation)
Refer to text book for math derivation i.e. Claus book
Best regards,
Anh T. Nguyen -
Anh T. Nguyen replied to K M
