Pravda Asset Management Harvard Case Solution & Analysis

This case discusses the importance of forecasting the expected return in the decision-making asset allocation. While the case is designed for MBA students in investment or portfolio management course, it is also suitable for advanced undergraduate course. It is written from the point of view of a new employee in a small investment management firm, he was surprised by the market crash of 2008 and the subsequent rebound of the market in 2009. IT Director at a meeting with an important client, to explain his asset allocation recommendations for 2008 and 2009 and to propose a new allocation going forward. He enlists the help of a new employee in the preparation of materials for this presentation. The case requires students to analyze the possibility of a simple ratio estimates to predict earnings. Students will use the smoothed price earnings to predict future earnings and the step-by-step instructions for the analysis. In addition, students must use their regression results to form a simple (two assets) tactical asset allocation strategy to better understand the importance of forecasting the expected return on assets for allocation decisions and how these predictions can be used to form a simple tactical asset allocation model. Students will also discuss issues related to performance measurement for tactical asset allocation or market timing investment strategy. "Hide
by Richard B. Evans Source: Darden School of Business 7 pages. Publication Date: August 26, 2009. Prod. #: UV2563-PDF-ENG

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