Investment Modeling

Usually economics models are so complex. Because we cannot simulate any lab conditions where we can vary one parameters and remaining all parameters are in constant.  So the modeling man should know all the scenarios in the economic world. On the other hand, the process are very simple, only buy and sell, simply exchange the one thing to other thing, but there is no definite rules, psychology Is the dominating term, if you need in pure technical term, there is million and billion of options to do a task, that is freedom. Which way you want to spend your money, you can spend.

As the first step we will see some boundary conditions by Benjamin Graham

 

1.    Be an investor, not a speculator.
Here he is suggesting the thrill, that is the speculation, avoid that. Never give up, and never except an unknown output. Keep your money safe and make it more and more. 
2.    Know the asking price.
Here, he asks you to do a little home work about the price negotiation. Put some little time to analysis the asking price and don’t do anything suddenly
3.    Search the market for bargains.
Knowledge is wealth. Try to know about all the things then automatically you will become a price fixer.
4.    Determine if the stock is undervalued.
Again he is suggesting the point number 3.
5.    Regard corporate figures with suspicion.
Never realize with their words and writings where realize only with their values that given to you 
6.    Don’t stress out.
A situation is unknown, first learn it. Then you decide how to perform. That is also suggesting the first point.
7.    Don’t sweat the math.
Again and again he is strongly suggesting that avoiding the thrill. Perform  in well known situation only. Avoid investment in unknown situation.
8.    Diversify among stocks and bonds.
If you are in a known situation, don’t believe, always you are in a known situation. Always add certain future risk. So don’t believe one alone, put your money in different type of investment
9.    Diversify among stocks.
 Within the type also classify sub types and split the investment to them.
10.    When in doubt, stick to quality.
He is again suggesting the point number 5. See what they are giving not writing and speaking.
11.    Use dividends as a clue for success.
Again the point number 5, and 10. Investment returns are the bench mark
12.    Defend your shareholder rights.
Don’t be afraid to stick the rules
13.    Be patient.
Before learn the complete situation, never perform
14.    Think for yourself.
Think about, the value of your life with money and without money. And realize how important money in your life.  Money is not the playground.