Analysis of The Rudy Wong Case-Raquel Sanchez

Analysis of the Rudy Wong Case-Raquel Sanchez
Analysis of the Rudy Wong Case
Raquel Sanchez
Florida National University
Applied Managerial Finance II
2021
Introduction
This essay is aimed to provide a better understanding of the role of an investment advisor,
present a framework for how a portfolio manager attempts to outperform, through security
selection and market timing. Examine the benefits of diversification, examine the development
of an investment policy statement, provide an understanding of the global financial crisis of
2007-2009, to introduce the notion of behavioral finance and how emotions and psychological
factors affect investment decisions.

1.
The role of an investment advisor is to serve as a guide in the making of financial
decisions of a potential investor regarding the approach to give to their resources, where to
invest, how much to invest, when to invest and of course analyze the possible returns of
investment and the profits that these investments can bring in different periods of time. Another
role is to examine a wide range of factors, including a particular client's liquidity needs,
disposable income requirements, tax planning situation, investment time horizon, and provisions
for unusual circumstances.
Basically Rudy Wong adds value by using his skills as a consultant and advisor. First, it
allows to show a clear picture free of adjacent emotions that allow the investor to see in a less
passionate way the possible uses of capital. It also emphasizes on making known the client's
limitations as well as their possibilities before an investment, recommending the appropriate
strategies to achieve the client's financial goals.
2.
These questionnaires facilitate several general points to take into account, for example
choosing the best investment strategy, knowing the profile and investment objectives of a client,
analyzing the possible reactions of a client to future market events, as well as helping to
understand how far the client can go by taking risks. Reduce complexity and simplify
understanding.
In part, a client's investment priorities and goals were revealed by the decision tree
questionnaire. They were also driven by a needs analysis, which examined age, gender, current
gross income, tax rate, expected retirement age, desired percentage of current income at
retirement, life expectancy based on ancestral longevity and exogenous factors such as future
inflation and tax rates.
There are several aspects that must be included in an IPS:
- The place where the client's assets are kept
- The identification of the trustees or interested parties of the account
- assets under its management
- the client's investment objectives
- the time horizon of the investment
- early withdrawals or deposits
- need for reserves or liquidity
- tolerance to risk and volatility.
3.
Illusion Control - The result of clients mistakenly believing that they can conduct their
own transactions to better shift their portfolio returns. Too optimistic
about trust
Confirmation bias (ignoring information about current views)
Emotional and psychological factors can influence investment decisions, for example,
suppose that a company with a relatively weak balance sheet must be a bad investment. Anchor
(start with the initial judgment, then gradually move away from it) and trust your intuition. The
framework effect includes the concept of loss aversion, that is, the weighting of impending losses
for a typical investor is more than twice that of similar returns to scale, which can lead to
investors being overly conservative.

4.
Bob Miller stated in his investor profile survey that he will not change his strategy just
because of short-term losses. Miller insisted that a large portion of his portfolio be allocated to
Canadian oil and gas inventories, although Huang Guangrong warned him many times that these
inventories would experience high cyclical fluctuations. Wong believes that these investments
are cyclical, which means that Miller should continue to invest with patience. Miller suffers from
the fantasy of control. Wong needs to help Miller overcome these decision-making obstacles to
best achieve his long-term goals.
Mary Swanson does not generally make emotional decisions. While she maintains the
overall growth and asset allocation strategy, she makes precise tactical adjustments to her
investment portfolio. Transfer of funds from government bonds to corporate bonds appears to
offer a tight return outlook the biggest risk. To continue his long-term investment strategy in
Mary Swanson, Huang Guangyu must make a strong case.
The C08230Y index is a 30-year US government bond index that has been calibrated to the scale
on the right side of the top chart. Represents the US Treasury Department Fair Market Index
Derived from the Bloomberg Fair Market Curve. The C088310Y index is a 10-year national
integral curve with a BBB rating and is calibrated on the scale on the left side of the top chart.
The spread between the two curves reflects the premium that investors are demanding to bear for
the higher risks associated with BBB bonds (relative to long-term US government bonds).
[ CITATION Ste17 \l 2058 ]

Conclusions
- A good financial advisor will teach you how to prioritize your business plans and needs
so that what is most important is addressed first.
- A financial advisor will give you the arguments from the figures and from the business to make
better decisions.
- The fact of having someone from outside to support you in analyzing results, defining action
plans, prioritizing and executing, will give new encouragement to the entrepreneur and his work
team to put into practice those ideas that they had in mind but had never been executed. .
- Financial issues are a mystery per se, especially if the manager lacks this financial knowledge. A
good financial advisor will help you understand the mystery behind finances, and you will
understand the principles that govern them, which will also be simple once you know and apply
them.
- During financial counseling, he will understand the correct levers and buttons to tap in his
organization or environment in order to achieve the expected results.

References
Ross, S. A. (2017). Essentials of Corporate Finance. Mc Graw Hill.

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Analysis of the Rudy Wong Case-Raquel Sanchez

Analysis of the Rudy Wong Case

Florida National University

Applied Managerial Finance II

of an investment policy statement, provide an understanding of the global financial crisis of

factors affect investment decisions.

The role of an investment advisor is to serve as a guide in the making of financial

for unusual circumstances.

limitations as well as their possibilities before an investment, recommending the appropriate

strategies to achieve the client's financial goals.

inflation and tax rates.

There are several aspects that must be included in an IPS:

- The place where the client's assets are kept

- The identification of the trustees or interested parties of the account

- assets under its management

- the client's investment objectives

- the time horizon of the investment

- early withdrawals or deposits

- need for reserves or liquidity

- tolerance to risk and volatility.

own transactions to better shift their portfolio returns. Too optimistic

Confirmation bias (ignoring information about current views)

investors being overly conservative.

best achieve his long-term goals.

Mary Swanson, Huang Guangyu must make a strong case.

[ CITATION Ste17 \l 2058 ]

so that what is most important is addressed first.

organization or environment in order to achieve the expected results.

Ross, S. A. (2017). Essentials of Corporate Finance. Mc Graw Hill.

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