Martingale Asset Management Analysis
This paper summarizes the process of creating a new strategy by Martingale Asset Management. One can find the basic information about 130/30 funds and low volatility strategies. Further on, I will be discussing in which parts they are good or bad or lack with these new ideas. At the end, one can find the discussions about how trading shaped or changed based on these new strategies and whether there is a normality that can be explained easily the benefits or is there an anomaly regarding the strategies. Martingale Asset Management is an investment management firm which was founded in 1987 as located in Boston to manage the many types of “investing” term. To be more specific we can describe the firm as “a quantitative and value-oriented”.
Actually …show more content…
After looking at general pros and cons, if they are still interested in, they would examine the stocks that they are thinking to invest. At this point, they can get benefit from how Martingale made the selection of stocks. Martingale chose multifactor model where they made the valuation of securities. The first thing was valuation of stocks according to the rates that they get from their price forward earnings or price-cash earnings. Afterward, the second step was to list the undervalued stocks by looking at their growth rates. At the end, Martingale was able to list the stocks from undervalued ones to overvalued with the help of these multifactor models. But at first investors should consider the changes or the regulations on the industry and should compare how suits they are with company. The growth rate that industry has as much as important that stocks have and the duration time of the investment should be clarified at first before the comparison of stocks. After all these searches they would find the best solution for them. But one can say that Martingale is appropriate to manage the 130/30 funds as they are earning good …show more content…
On the other hand, when beta is greater than one, managers can invest in short with getting bad risk adjusted return but being higher than market return. Actually this is the problem. However the investors usually choose the second one. Even though they get bad returns, they choose the risky stocks. Because they want to be seen as higher than market return instead of being under the market return. This is called as the strategy of tracking
Actually …show more content…
After looking at general pros and cons, if they are still interested in, they would examine the stocks that they are thinking to invest. At this point, they can get benefit from how Martingale made the selection of stocks. Martingale chose multifactor model where they made the valuation of securities. The first thing was valuation of stocks according to the rates that they get from their price forward earnings or price-cash earnings. Afterward, the second step was to list the undervalued stocks by looking at their growth rates. At the end, Martingale was able to list the stocks from undervalued ones to overvalued with the help of these multifactor models. But at first investors should consider the changes or the regulations on the industry and should compare how suits they are with company. The growth rate that industry has as much as important that stocks have and the duration time of the investment should be clarified at first before the comparison of stocks. After all these searches they would find the best solution for them. But one can say that Martingale is appropriate to manage the 130/30 funds as they are earning good …show more content…
On the other hand, when beta is greater than one, managers can invest in short with getting bad risk adjusted return but being higher than market return. Actually this is the problem. However the investors usually choose the second one. Even though they get bad returns, they choose the risky stocks. Because they want to be seen as higher than market return instead of being under the market return. This is called as the strategy of tracking