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Research
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| Why
Research? |
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To protect wealth, Risk control is
decisive. As the performance of the asset management of AS was
comparable with average results in the period 2000 to 2002, we
considered the results as strongly unsatisfactory.
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| The
Utility |
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Based
upon a specific Risk Control System, we create absolute performance
and beat the Indexes: MSCI World (for our Global Portfolio), SPI
(for our Swiss Portfolio) and the Swiss
Bond Index (for our Bond Portfolio).
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| The Problem |
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Efficiency
and rationality
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The years
following 1999 produced huge losses in asset management worldwide,
if investors had followed the classical and widely established
economic financial theories, based on two principles:
- efficiency of the financial
markets (with buy and hold strategy) and
- rationality of investors
Since then Behavioural Finance has
become much more recognized, culminating in the Nobel Prize for
Economics to a psychologist (D. Kahneman). However, as social
psychology covers the individual level and is often based on
clinical tests, its validity is limited. It cannot explain the
impact of the socialisation of an individual in a social network,
i.e. banks influencing stock recommendations of their analysts or
corporates, influencing their accountants or corporate communication
just to please investors. Furthermore, social psychology has
limitations when taking into account the impacts of politics or
culture on financial markets.
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THE AS RISK CONTROL
SYSTEM
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| The Solution |
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Communication,
the key to an enhanced performance in Asset Management
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Finance is in
the midst of a paradigm shift from the efficient markets that
dominated the last 30 years towards an approach that better reflects
the realities of markets. And for this improvement we use a triple
communication approach.
- Shift from the perspective of
information output to information input (information
processing).
- Financial markets are social
systems and imbued by one phenomenon: communication.
- Communication interconnecting the
three main structural levels is predestined to an
inter-disciplinary approach. The three structural levels are as
follows
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| Personal
level |
Basic human
features such as greed, fear, expectations,
opinions/framing, hopes, rumours, information and
confidence. Theories: Information processing, attribution
and cognition, reception and Behavioural Finance (prospect
theory). |
| Corporate
level |
Role as an
employee / CEO / CFO etc., Accounting manipulations,
misleading recommendations, highly overpriced mergers,
IPO’s. Corporate communication, Corporate Governance,
Investor Relations. |
| Macro
level |
Interest rate
politics (from «irrational exuberance» to historically low
rates), Agenda Setting and the publication of macro data
such as: GDP, Treasury Budget, Retail Sales, Industrial
Production, Supply Management, Consumer Confidence, Price
Indices and Employment, accompanied by fundamental changes
in the perception of threat and risk (politics). |
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| Risks |
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The backbone
theory of AS Research is the General Systems Theory (G.S.T.). This
theory permits AS to establish for each of the three structural
levels the characteristic relations between the system and the
environment. Fields of risks:
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| Micro
communication |
Information
processing on a individual level |
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| Meso
communication |
Internal and
external corporate communication / corporate rationality,
role determination, influence of the general tone: euphoria,
pessimism, business expansion or core business, dot coms. |
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| Macro
communication |
Financial market
communication (news values), communication of Central Banks,
Supervisory Boards e.g. SEC, SFBC, FDA, scandal and
political communication. |
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| The Signals |
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Our research
on finance moves from so-called "anomalies" to
explanations of these by means of undiscovered patterns, because the
validity of conventional economic financial theories is limited. Therefore
AS combines the three structural levels by means of communication
based upon the General Systems Theory (G.S.T.) to systematically
create absolute performance and beat the Indexes. This
interdisciplinary approach brings together the knowledge of
different scientific fields touching financial markets (personal
communication, corporate communication, macro communication:
public opinion, politics) to achieve an analytical tool signaling us
risks. The AS Risk Control System is closer to realities of
financial markets, as it is based on a communication approach, not
on financial mathematics and it is fruitful in one single domain:
Risk Management.
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| Innovation |
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Important
scientific work has been accomplished by innumerable academics in a
huge number of fields touching on these three levels. But if you
consider financial markets as a system of communication to match
risks better, the combination of these results, in the field
of financial markets, is much rarer and almost nonexistent.
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