The following information relates to Questions 8–15
Empire & Associates, an investmentmanagement firm, has been in operation since 1974. Empire utilizes aproprietary valuation model based on fundamental analysis to select individualstock and bonds, and also employs technical analysis to help identify market anomaliesand momentum effects. They use the output of their fundamental and technicalanalyses to actively manage clients’ accounts. Empire also recognizes theeffects of investors’ background and past experiences on investors’ behaviorsand decision making, and uses a behavioral alpha process to classify itsclients into behavioral investor types.
Anthony Rodriguez, investment adviser, hasbeen tasked with transitioning three new clients’ investment portfolios.Rodriguez has reviewed for each completed new client questionnaire, currentportfolio, and some notes on the client. He prepares the following summaries:
Christine Blake is a 35-year old free-lancewriter of several successful children’s books. Her primary source of income isroyalty payments. She has accumulated a portfolio with a current value of $3.6million. Blake has always self-managed the portfolio and has confidence in herinvestment abilities. Blake would like to be able to make independent decisionswhen opportunities arise. On several occasions, Blake has found herself holdingpositions with sizable losses and she has been reluctant to sell when asecurity declines. Because of these losses and the general size of herportfolio, she is seeking professional help. She is willing to consider higherrisk investments if her research identifies an attractive opportunity. Hercurrent portfolio consists of 15 equity positions of equal dollar value,diversified across eight industries and four different countries.
Margaret Neilson is a 59 year old senior vicepresident of marketing for a highly successful, plastic injection corporation.Neilson has little investment experience and currently holds an $800,000investment portfolio. Neilson has come to Empire because 80% of her portfoliois invested in the plastic injection corporation’s shares that were obtainedthrough an employee stock ownership plan. Neilson is nearing retirement and isworried about a weakening economy and the potential effect it could have on theplastic injection corporation’s share price. Neilson wishes to avoid high risksituations.
Thomas Williamson is a 47 year old surgeon;he is considered one of the world’s best in his specialty, and earns severalmillion dollars each year. Williamson recognizes that he has limited investmentexpertise and considers himself a low to moderate risk taker. Williamsonestablished a brokerage account several years ago and funded it with $4million. He has made no withdrawals from and no additional payments into theaccount. He selected investments by acting on the advice of other doctors andfriends. This advice led him to purchase many popular stocks, and his portfoliois currently worth $3.55 million. Because he was so busy, he felt he mistimedbuying and selling stocks. His current portfolio is concentrated in shares ofeight US healthcare companies.
Rodriguez is meeting with Ian Carter,portfolio manager and Lila Suzuki, investment strategist, later in the week toestablish an investment plan for each client. Rodriguez has worked with Carterand Suzuki on other client accounts. To facilitate discussion at the meeting,Rodriguez has emailed the summary on each client and asked that they providesome preliminary views prior to the meeting.
Carter is a senior portfolio manager with anexcellent performance record. He has expressed concern about the use ofinvestor type classification models due to their many limitations. Carterbelieves that Empire’s fundamental approach to analysis provides great value.However, he believes the technical analysis department is compatible with soundinvestment practices.
Suzuki tends to rigidly adhere to assetselections based on the proprietary valuation model. She has stated, “Sure it’sa complex model, but it incorporates hundreds of different pieces of datarelevant to a company; therefore, it’s more thorough than any other analysis.”With respect to Empire’s technical analysis, Suzuki believes that theidentified opportunities are not ‘true’ market anomalies but rather they areassociated with higher risk exposures.
In establishing the portfolios for these newaccounts, Rodriguez would like to address a recent memo from the technicalanalysis department that recommended overweighting clients’ portfolios in thetechnology and consumer goods sectors. The memo’s conclusion stated, “Thesesectors are depressed below their ten-year average levels. Every time that thishas occurred in the past, these sectors have recovered to their mean in a shortperiod of time.” Rodriguez believes that technical analysis has the potentialto uncover opportunities where there are over- or under-reactions to relevantinformation.
15
、Whose statement regarding the technicalanalysis department is most accurate?
A．Carter.
B. Suzuki.
C. Rodriguez.
这题A为什么不对？
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