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Swimming With Sharks – Part 1

Swimming With Sharks: Part 1

Imaging for a moment you are a portfolio manager, say, managing a mutual fund. You have mandate and rules to follow that are designed to keep you close to your mandate. Now, let’s add to this the fact that you are what is known as a “bottom-up” investor, meaning that your investment decision-making process is one that requires that you (a) rely on your economist(s) for views regarding the overall economy, (b) rely on your investment strategist(s) for overall market views, and, above all, (c) you analyze companies and make investment decisions on them based on the companies growth and profitability and how these data make their way from the company’s financial statements to your financial model and then, ultimately, to your valuation model.

Question: Where in the above scenario does something like the recent (and on going) Cyprus crisis fit?
Answer: It doesn’t – at least not as it pertains to what you are charged to do.

This description is how one facet of what we call the financial markets’ structure is how our trusty bottom-up portfolio manager operates. His/her’s scope is narrow and

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