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Math Help - I suppose self schooling and self proclamation as a FinancialEngineer does no good

  1. #1
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    I suppose self schooling and self proclamation as a FinancialEngineer does no good

    For the past 8 years, I been learning on my own

    No I don't read much books if I do then just the title of chapter or a couple of paragraphs

    I do my own research into financial measures that help an analyst determine an investor's ROI - return on investment

    Currently the count of such measures that I have conjured up stands at 150 with ever more ideas coming in as days pass by

    Yet if I attempt to analyze my own investment (my online ventures and software products) using the same tools I have developed then I realize there is no payback period for my own investment, all yields and net values are all negative

    But I got nothing to lose I suppose, so I cook up some more stuff that offer the analyst a set of new tools every time she comes to my site

    But then those who run the show on internet have their own ideas based on my ideas and I am going nowhere with this

    I am very honest man, never robbed anyone whom I did business with on my e-nterprise

    Olivier De La Grandville starts each of the chapters in his book on fixed income securities with quotes from Shakespeares' work so I suppose putting nations into financial chains is nothing new only the actors and directors have changed
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    Re: I suppose self schooling and self proclamation as a FinancialEngineer does no goo

    Frankly, I couldn't help but wonder if this wasn't a joke. You have 150 ways to "determine an investors ROI". Okay, so what? One way is sufficient, isn't it? And, although I have no idea what a "Financial Engineer" is, a financial advisor has to do a lot more than just determine ROI. The difficultly with self schooling and "self proclamation" is that there is no "standard" to measure your skills by. Even you have no idea how you compare to those who did go to Business School and were graded on standard tests. How can anyone else have confidence in you?

    I have no idea what you mean by "putting nations in financial chains" nor what that has to do with what you are saying here.
    Last edited by HallsofIvy; April 15th 2014 at 07:20 AM.
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    Re: I suppose self schooling and self proclamation as a FinancialEngineer does no goo

    One is not sufficient.

    Even though a net present value tells the investor the amount of money she stands to gain or lose from the project, but they would want to know if there is a payback period that ensure recovery of the "initial cost". But then they would then want to know if there is a payback period that recovers "all costs". Yet the investor is concerned about time value of money so they would want to know the discounted payback period. But then how does this investment fair as compared to the other so they would want to know the benefit to cost ratio. But what if the investors goes ahead with the investment but want to know its worth T periods from present at which she decides to sell the investment so they would want to know the net intermediate value. But then the investor may be reinvesting the proceeds at a different rate than the finance rate so they would want to know the net horizon value. All of this fine but the investor wants to know the rate of return so they want the IRR but there may not always be an IRR so they can find the modified IRR for which there is a formula. But the investor is looking at maturity so they want to know the net future value the amount they will have at termination of contract. But then the investor needs to know a uniform amount they made or lost over the life of investment so they would want to find the equivalent annual annuity. But then the investor is looking for the least cost investment where they are only concerned with costs thus they need to find the equivalent annual cost. But now the investor is concerned about how much of a change is expected if the rate of return were to rise/fall by a 1% so they would want to find the duration of the investment (not just for bond but for any investment they make). But duration only offers a linear trend so they want to know the convexity of the investment that is measured in years square. But then there are investments where there are multiple returns over time so the investor may want to know the geometric return or arithmetic return.

    All that is fine when a single discount rate is used over the term of the investment, but what if the investor has to deal with a term schedule of interest or what they call the interest rate shocks so the investor would want to find all the previously listed measure to address the term structure of interests

    But business transactions are recorded with date of the inflow and outflow, now the investor wants to know the same measures using the actual time periods rather than the generic 30/360 day count

    Now the investors wants the same calculations using schedule of interest rates and the schedule of transaction dates

    But then they have the measurement values and the likelihood of each of such measures so now the investor wants to know the expected values of all such measures

    But wait the investor has basket of investments so they would want to know the incremental and decremental values of the same measures

    But then you have investment banks who deal with portfolios so the investor want the same calculations for the whole portfolio rather than a single or dual investment

    "Financial Engineer" is usually the one who deals with risk management techniques that allows the investors to mitigate their loses from unexpected market conditions. So I am not there yet but may be I am heading in that direction

    I do not put myself in competition with degree holders or other professional Financial Engineers, as I had to have a title for what I do thus the claim to self fame that does not take me anywhere as I haven't gone anywhere in life may it be the time I spent in New York when I was young or later years in a far away land where people give you queer looks when they hear the sound they associate with the Great Satan

    Putting nations in financial chains is exactly that when you look at the US federal debt that currently stands at around $12 trillion dollars without the Federal Government having any ability to service the debt (pay the interest payments) let alone be able to pay the principal in full. The estimates at the Congressional Budget Committee state that debt to GDP ratio will surpass 100% within or even before the next 15 years when servicing the debt will become nearly impossible. Those who own such debt never forgot the nuking of their cities at the End of World War II. They knew they can't win a military war so they launched an economic and financial one

    Just in case if you want to analyze the investments using the 150 measures I spoke of then be my guest and try it out here

    http://finance.thinkanddone.com/32_b....5_en_demo.zip

    But you will get a Deja Vu feeling when some software company updates its spreadsheet program in 2015 that look similar to what I offer
    Last edited by AbrahamA; April 15th 2014 at 09:37 AM. Reason: corrected the missing text
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