Assessment of investment returns through the prism of investment strategies: comparison of performance of the most successful investors and the Slovenian funds
In this paper, the authors analyze the investment philosophies and strategies of three financial mogul companies to find out what strategies they apply, yielding high returns. They also analyze their performance compared to Slovenian mutual funds and the broader stock market. The authors focus on so...
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| Format: | Article |
| Language: | English |
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Entrepreneurship and Sustainability Center
2024-12-01
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| Series: | Entrepreneurship and Sustainability Issues |
| Online Access: | https://jssidoi.org/jesi/article/1245 |
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| author | Ema Peternel Vladimir Bukvič |
| author_facet | Ema Peternel Vladimir Bukvič |
| author_sort | Ema Peternel |
| collection | DOAJ |
| description | In this paper, the authors analyze the investment philosophies and strategies of three financial mogul companies to find out what strategies they apply, yielding high returns. They also analyze their performance compared to Slovenian mutual funds and the broader stock market. The authors focus on some key research hypotheses. First, they are interested in assessing and monitoring the company's future intrinsic value, which refers to a fundamental, objective value contained in a financial asset. If the market price is below this value, this financial asset may be a good buy, or if it is above, it may be a good sale. While studying the investment strategies, they check if such an assessment enables above-average investment returns. Second, the authors state that the fund's profitability and risk reflect the chosen investment strategy. Investors generally expect higher returns from riskier investments. Risk tolerance is one of the critical factors determining the return on investment. Typically, higher-risk investments have the potential for higher returns, but they also come with a greater risk of loss. The authors compare and test how the risk is embedded in the investment strategies of three renowned financial investors and Slovenia mutual funds. Third, the authors hypothesised that time and patience are among the most critical factors in investing. The authors' fourth research hypothesis relates to the question if the stock market always accurately reflect the value of individual companies. Many researchers today argue that some market participants behave irrationally, what leads to market inefficiency. They suggest that the financial market can never be perfectly efficient. In the theoretical part of the paper, the authors begin with a brief literature overview underlying how different factors affect investment returns, especially focusing on the indicator ROI. Further, they shortly represent the investment strategies of Buffett, Ackman, and Palihapitiya. In the empirical part of the paper, they perform some financial calculations — annual return, average annual return, annual standard deviation, Sharpe ratio, and then proceed with a Monte Carlo simulation and a CAPM model. The author's findings show that a deep understanding and accurate assessment of a company's intrinsic value leads to above-average returns. The risk and return of a fund are tied to the strategy chosen, with those willing to accept a higher risk often achieving higher returns. They underline the importance of time and patience in investing and observe that the stock market does not always reflect the exact value of an individual company accurately, which emphasizes the importance of critical judgement and not blindly following market trends. |
| format | Article |
| id | doaj-art-e9accbfe7dd348798fc684a71d5508b0 |
| institution | OA Journals |
| issn | 2345-0282 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | Entrepreneurship and Sustainability Center |
| record_format | Article |
| series | Entrepreneurship and Sustainability Issues |
| spelling | doaj-art-e9accbfe7dd348798fc684a71d5508b02025-08-20T02:05:13ZengEntrepreneurship and Sustainability CenterEntrepreneurship and Sustainability Issues2345-02822024-12-01122315210.9770/e4338524934Assessment of investment returns through the prism of investment strategies: comparison of performance of the most successful investors and the Slovenian fundsEma Peternelhttps://orcid.org/0009-0004-0447-2221Vladimir Bukvičhttps://orcid.org/0000-0003-1330-9720In this paper, the authors analyze the investment philosophies and strategies of three financial mogul companies to find out what strategies they apply, yielding high returns. They also analyze their performance compared to Slovenian mutual funds and the broader stock market. The authors focus on some key research hypotheses. First, they are interested in assessing and monitoring the company's future intrinsic value, which refers to a fundamental, objective value contained in a financial asset. If the market price is below this value, this financial asset may be a good buy, or if it is above, it may be a good sale. While studying the investment strategies, they check if such an assessment enables above-average investment returns. Second, the authors state that the fund's profitability and risk reflect the chosen investment strategy. Investors generally expect higher returns from riskier investments. Risk tolerance is one of the critical factors determining the return on investment. Typically, higher-risk investments have the potential for higher returns, but they also come with a greater risk of loss. The authors compare and test how the risk is embedded in the investment strategies of three renowned financial investors and Slovenia mutual funds. Third, the authors hypothesised that time and patience are among the most critical factors in investing. The authors' fourth research hypothesis relates to the question if the stock market always accurately reflect the value of individual companies. Many researchers today argue that some market participants behave irrationally, what leads to market inefficiency. They suggest that the financial market can never be perfectly efficient. In the theoretical part of the paper, the authors begin with a brief literature overview underlying how different factors affect investment returns, especially focusing on the indicator ROI. Further, they shortly represent the investment strategies of Buffett, Ackman, and Palihapitiya. In the empirical part of the paper, they perform some financial calculations — annual return, average annual return, annual standard deviation, Sharpe ratio, and then proceed with a Monte Carlo simulation and a CAPM model. The author's findings show that a deep understanding and accurate assessment of a company's intrinsic value leads to above-average returns. The risk and return of a fund are tied to the strategy chosen, with those willing to accept a higher risk often achieving higher returns. They underline the importance of time and patience in investing and observe that the stock market does not always reflect the exact value of an individual company accurately, which emphasizes the importance of critical judgement and not blindly following market trends. https://jssidoi.org/jesi/article/1245 |
| spellingShingle | Ema Peternel Vladimir Bukvič Assessment of investment returns through the prism of investment strategies: comparison of performance of the most successful investors and the Slovenian funds Entrepreneurship and Sustainability Issues |
| title | Assessment of investment returns through the prism of investment strategies: comparison of performance of the most successful investors and the Slovenian funds |
| title_full | Assessment of investment returns through the prism of investment strategies: comparison of performance of the most successful investors and the Slovenian funds |
| title_fullStr | Assessment of investment returns through the prism of investment strategies: comparison of performance of the most successful investors and the Slovenian funds |
| title_full_unstemmed | Assessment of investment returns through the prism of investment strategies: comparison of performance of the most successful investors and the Slovenian funds |
| title_short | Assessment of investment returns through the prism of investment strategies: comparison of performance of the most successful investors and the Slovenian funds |
| title_sort | assessment of investment returns through the prism of investment strategies comparison of performance of the most successful investors and the slovenian funds |
| url | https://jssidoi.org/jesi/article/1245 |
| work_keys_str_mv | AT emapeternel assessmentofinvestmentreturnsthroughtheprismofinvestmentstrategiescomparisonofperformanceofthemostsuccessfulinvestorsandtheslovenianfunds AT vladimirbukvic assessmentofinvestmentreturnsthroughtheprismofinvestmentstrategiescomparisonofperformanceofthemostsuccessfulinvestorsandtheslovenianfunds |