Wealth Management in Asia

A summary note below of tutorial 9 & 10 to complement your tutorials and the respective slide deck material.
Tutorial 9. Qu 1:
Intro to behavioural finance. Investors look to explore why your mind can play tricks on you when you invest and what you can do about it to limit wealth destruction at the wrong stage of the cycle. Behavioural finance explores the emotional dynamics which guide the investors (or investment bank, wealth management advisors) in their financial decisions.
Tutorial 9. Qu2:
Review of the Modern portfolio theory, the rational investor and the classic investment approach. Reinforcing weeks 7 & 8 re SAA benchmarks (BM). The appropriate SAA BM takes into account investors risk tolerance, expected returns and any behaviour biases.
Tutorial 9. Qu3:
Seven traps for investors. Know them.
• Selective Perception: Ignoring information that contradicts our opinion
• Herd Instinct: Group Dynamics – Doing what everybody else is doing
• Overconfidence: Trading too much
• Loss Aversion: Selling winners too soon and losers too late
• Ignoring Lessons from the Past: “This time it is different”
• Home Bias: Investing only in what we know
• Lack of Diversification: Too concentrated portfolios
Tutorial 9. Qu4:
Article dated March 2020 in the depth of COVID uncertainty and addressing themes from weeks 7-10 on some perspective.
Tutorial 10. Qu1:
Behavioural biases and the invisible gorilla. How our intuitions deceive us. Understand and be wary of your intuitions. Think twice before you decide to trust intuition over rational (verifiable) analysis.
Tutorial 10. Qu2:
Over confidence. We used the horse racing analogy which was tested via suvey. Investors tend to be a lot more confident that a stock price will rise after they own a position. This emotional commitment to a company may lead to inappropriate assessment of the risks involved.
Tutorial 10. Qu3:
Herd Behaviour & Group Dynamics. Portfolio Implications & how to handle Group Thinks.
Tutorial 10. Qu4:
Understand the 3 different Case Studies why they happened (s