Investment

History and Terminology

• The qirad was a major financial instrument in the medieval Islamic world.
• The qirad was similar to the institution of the commenda used in western Europe.
• In the early 1900s, purchasers of stocks, bonds, and securities were called speculators.
• After the Wall Street crash of 1929, the term investment came to denote the more conservative end of the securities spectrum.
• Speculation and speculator have referred to higher risk ventures since the last half of the 20th century.

Investment Strategies

• Value investing involves buying undervalued assets and selling overvalued ones.
• Value investors use financial analysis to evaluate securities.
• Warren Buffett and Benjamin Graham are notable value investors.
• The price-to-earnings ratio (P/E) is a significant fundamental ratio used in value investing.
• The price-to-book ratio (P/B) is another important metric for evaluating investments.

Growth Investing

• Growth investors seek investments with higher future earnings or value.
• They evaluate current stock value and predictions of future financial performance.
• Capital appreciation is the main goal for growth investors.
• The price-to-earnings (P/E) multiple is often used in growth investing.
• Growth stocks typically have higher P/E ratios compared to others in the industry.

Risk and Return

• Investors generally expect higher returns from riskier investments.
• Low-risk investments usually have lower returns.
• Diversification reduces overall risk in a portfolio.
• Investing in tangible assets like property also carries risk.
• Industry volatility can affect the level of risk in different sectors.

Foreign Exchange Risk

• Savings in foreign currency accounts are exposed to foreign exchange risk.
• Changes in exchange rates can decrease the value of savings accounts.
• Investing in foreign markets involves currency gains or losses.
• Foreign exchange risk can impact investment returns.
• Hedging strategies can be used to mitigate foreign exchange risk.

Investment Mentions

Investment Data Sources