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Welcome to..
Wealth Management System Limited
Wealth CampusWealth Campus
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Wealth Management System Limited
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Portfolio Management TechniquePortfolio Management Technique
Present toPresent to
State Securities Commission State Securities Commission
The Vietnam Securities Research and Training CenterThe Vietnam Securities Research and Training Center
November 22-23, 2007November 22-23, 2007
Wealth Management System Limited
Chapter 1Chapter 1
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Portfolio Management Technique
Course Objective : To develop the practical portfolio management skill required such as
the overview of fundamental analysis, technical analysis, money management, risk
management and the most crucial key success factor of portfolio management….the winning
psychology.
Course Content : The course will present various aspect of portfolio management
techniques by presenting the trading system based on many technical analysis techniques,
how to apply the money management by identify the stop loss, lock in profit level and reward to risk ratio , comparing various technical analysis upon each market condition, stock selection method based on fundamental analysis,
setting up the portfolio position limit by apply the PV01 and VaR concept, interesting articles, workshops and presenting the important of the psychology aspects as the most crucial key success factor of portfolio management.
Participant : The course is designed not to concentrate on in dept technical analysis and fundamental analysis but how to apply the said analysis in real life practical portfolio management, hence it is required that the participant has at least 2 years portfolio management experience with both technical and fundamental analysis background.
Course Length : 2 days
Portfolio Management Technique (Day 1)
Course Agenda : Day 1
• The Psychology of Trading
Introduction – Trader Evaluation Profile 1
• Investment Process Technical Analysis Overview Fundamental Analysis Overview Trading System
• Money Management Reward to Risk Ratio• Risk Management Stop Loss Lock in Profit Position Limit (PVO1/VaR)• Workshop 1 : Identify Stop Loss / Lock In Profit / Reward to Risk Ratio
• Workshop 2 : VaR Calculation for Equity and Fixed Income Portfolio
Portfolio Management Technique (Day 2)
Course Agenda : Day 2
• Overview of Day 1
• Workshop 3 : Position Limit Setting • Interesting Issues CANSLIM Some Famous Number (Fundamental Analysis)
The Investment Clock Astronomical Cycle (vs various Technical Analysis)
The Pick of the Mix ( Various Option Pricing Model)
Time not Timing Casino Strategies (Trading System)
• Workshop 4 Trader Evaluation Profile 2
The Investor’s Quotient The Psychology of Successful Investing in Commodities & StocksJake Bernstein
Market WizardsInterviews with Top TradersJack D. Schwager
Martin Zweig’s Winning On Wall StreetMartin Zweig
Trading For A LivingPsychology Trading tactics Money ManagementDr.Alexander ElderDirectorFinancial trading Seminars, Inc.
Stock Market WizardsInterviews with AMERICA’S TOP STOCK TRADERSJack D. Schwager
The New Market WizardsConversation with America’s Top TradersJack D. Schwager
45 Years In Wall StreetWilliam D. Gann
One Up On Wall StreetPeter Lynch
Reference Books
How to Make Money in StocksA Winning System in Good Times or BadWilliam J. O’Neil
The Big HittersKevin Koy
Reminiscences Of A Stock OperatorEdwin Lefevre
Stock Market Trading SystemsGerald Appel and Fred Hitschler
High Performance Futures TradingJoel Robbins, Editor
Managing Risk in the Foreign Exchange, Money, and Derivative MarketsHeinz Riehl
Technical Analysis of the Futures MarketsA comprehensive Guide to trading Methods and ApplicationsJohn J. Murphy
Working Experience
Year Responsibilities / Department / Institution
1999 - Present Chief Executive OfficerWealth Management System Limited
Aug. 1995 - 1999 Senior Consultant / System Design & Model Wealth Management System Limited1994 - 1995 Treasurer
Citibank Private Bank1990 - 1995 Investment Advisory Unit Head
Private Bank (Vice President) Citibank Private Bank
1985 Trainee / Provident Fund Dealer / Fixed-Income Dealer / Equity DealerCitibank Bangkok
Somkiat Chinthammit
Somkiat Chinthammit
Investment / Treasury Experiences :
Investment Committee / Flexible Asia Performance / Citibank Hong Kong (1993-95) Asian Account Review Committee / Investment Committee / PBG - Thailand (1990-95) Treasurer / Citibank Private Bank (1994-95) Investment Advisory Unit Head / Citibank PBG (1990-95) Fund Management Advisor / Aitco / Social Security Fund (1996-04)
•Guest Speaker : - Citibank Japan/Citibank Taiwan/Citibank Singapore, etc. (1992-94) S.E.C. (Private Fund Management under U.S. Law) (1994) Thammasat (Investment Objective Setting) (1995) Thai Sky (Private Fund Management) (1994) TRIS / Banks / AMC’s / SEC / MOF / Universities.. etc.......... (1993-Present) Executive Director / Faculty of Accounting & Business Admin / Mahasarakarn University (2004-Present)
•Trainer : Product Knowledge (Investment / Treasury Products) / Citibank BKK (1992-95) Investment Management Technique/ Citibank Hong Kong (1994)
Award Score first place in “Operation in S.E.T.” presided over by S.E.T. chairman Teacher of the year 1994 : Citibank
Adirek Pratipatpong
Education Bachelor Degree of Commerce & Accountancy, 1993Major: Banking and FinanceChulalongkorn University
XMBA , Thammasat University 2006
Experience Citibank, N. A. Bangkok
Treasury Operation Unit April 1993 – August 1996
• Processing all Treasury Products such as Money Market, Foreign Exchange, Fixed Income Securities and Derivatives Product with correctness, timeliness, and ensure all the process comply with bank’s operation manual.
• Control over the workflow in product program to ensure that all processes are correct and comply with audit policy.
• Prepare accounting entry, accounting proof and reconcilement.• Development the process and working environment to make work flow more efficient.• Monitoring risk on each products by prepare management report for management awareness.• Assisting price risk management as daily MTM on trading products, comparison of position reports to
the bank, reconcile outgoing and incoming confirmation.
Treasury Interbank Unit August 1996 – August 1999
• Managing Foreign Exchange (FX) position and Interest Rate Exposure (FX Swap).• Managing Long-Term Swap and Interest Rate Derivatives position.• Implementation Derivative system “PRISM” for pricing and booking all derivative product.
Adirek Pratipatpong
Securities Trading and Distribution Unit August 1999 – October 2002
• Managing Fixed Income Portfolio for both local and foreign currency with strict adherence to standard as set out on bank’s policy and risk management standard.
• Coordinate with derivative unit to launch structure products to customer such as Puttable BE’s, Credit Linked Note and Asset Swap.
• Provide useful interest rate information to all required unit to reserve the bank’s client satisfactory.
• Advising offshore investor for investment in THB bond market.• Coordinate with Corporate Finance Department on primary market function to do market
testing, pricing, and distribution for the new issued corporate debenture.
UOB Radanasin Bank
Fixed Income Department November 2002 – November 2004• Managing Fixed Income Portfolio with strict adherence to standard as set out on bank’s
policy and risk management standard.• Advising issuer to raise fund in capital market by do market testing and distribution for new
BE issue.• Development the process, workflow and risk control of fixed income products to be more
efficient and more productive.
MissionMission The Best R&D and Software House for Asset Management, Treasury and Risk Management in Asia Pacific.
Software Development / Training / Consulting
Boutique software house + Citibank Bank 's management concept
FounderFounder Experienced Professional from Global Bank & Corporation.
CredentialCredential • Best Financial Software (TICTA 2005 - 6)• Local Hero (IDC USA-2000)• FRIT PRIZE Award 2005 ( Nationwide IT Contest )• Highest Market Share of Asset Management Software since 2004• Class A Consulting Company by Ministry of Finance• BOI Promoted Company (2001 – 2016)• Risk Management Projects – BASEL II 2004-6
Y2002Services Services
Professional Best
BONANZABONANZA
Quality of Technology : Content & StandardsQuality of Technology : Content & Standards
TICTA (Thailand ICT Award) Bonanza Family : Winner 2006
• Bonanza Investment• Bonanza Selling Agent• Bonanza @Risk
Bonanza Investment : Winner 2005Bonanza @Risk : Runner-up 2005
Bonanza Investment : FRIT Prize Winner 2005 Highest Prize for Software Company in ThailandNationwide Competition17 Months Evaluation75 Judges (25x3 Rounds)The FRIT Prize Runner-up was APICTA 2004 Winner
2002 CMM Level 2 / Class A Consultant2001 LOCAL HERO (IDC-USA)
Reference Site Risk consulting plus Bonanza Software
Public Debt Management Office : Ministry of Finance
Risk Model / Risk Manual / Review Risk DatamartCredit Rating Model / Datamart
Government Savings BankMarket & Liquidity Risk System / Credit Scoring WorkshopBASEL II / BOT / MOF
Government Housing Bank BASEL II / ALM
Bank Thai Market & Liquidity Risk System / Consult
Ayudhya Investment and Trust Plc. Market & Liquidity Risk Consult / Manual / Credit Scoring Model
Social Security Office Risk Management Consulting / Market Risk
SPL : Car leasing Credit Scoring Model
Airport Authority Of Thailand Exposure Management (Price / Interest Rate Risk)
SME Bank (Outsource from AT Kearney : EDS (USA) BASEL II / BOT / MOF
Credit Foncier Asia BASEL II / BOT
LH BANK BASEL II / BOT
THAI CREDIT BANK BASEL II / BOT
AIG BANK : AIG Group (USA) BASEL II / BOT
Portfolio Management Technique (Day 1)
Course Agenda : Day 1
The Psychology of Trading
Market WizardsInterviews with Top TradersJack D. Schwager
PSYCHOLOGY OF WINNING INVESTMENT PSYCHOLOGY INVENTORY
BASIC THEORY : TEACHING WINNING TRAITS
↓ IMPROVE THE
PERFORMANCE
10 AREAS → 3 GROUP
1) PSYCHOLOGICAL FACTOR2) MANAGEMENT & DICIPLINE FACTOR
3) DECISION – MAKING AREA TECHNICAL ≠ SUCCESS
DR. VAN K. THARP (1)DR. VAN K. THARP (1)
The Psychology Of Trading
CHARACTERISTICS OF THE LOSER
DR. VAN K. THARP (2)DR. VAN K. THARP (2)
HIGHLY STRESS NEGATIVE OUTLOOK LOT OF CONFLICT (PERSONALITY) BLAMES OTHERS DISORGANIZED IMPATIENT
The Psychology Of Trading
DUPLICATE THE 3 FACTORS OF TOP TRADERS USED then You can duplicate their results.
The Psychology of Trading
DR. VAN K. THARP (3)DR. VAN K. THARP (3)
3 FACTORYS :
1) BELIEFS
2) MENTAL STATES (blame other/angry/ impatient)
3) MENTAL STRATEGIES
SEE SIGNAL SEE SIGNAL
RECOGNIZE RECOGNIZE
MIGHT GO WRONG FEEL GOOD
FEEL BAD
BELIEFS DIFEFERENCE → RESULT DIFFERENCE
DR. VAN K. THARP (4)DR. VAN K. THARP (4)
THE U.S. SHOOTERS CASE GUNS ARE EVIL; THEY KILL PEOPLE SHOOT TOO MANY; MIGHT GO DEAF IF MISS TARGET; WRONG WITH GUN
SHOOTH WELL : SURVIVAL HUNTING IS FUN MENTAL REHEARSAL IS IMPORTANT IF MISS; IMPACT PERFORMANCE
The Psychology of Trading
BELIEFS :
DR. VAN K. THARP (5)DR. VAN K. THARP (5)
MONEY IS NOT IMPORTANT
IT IS OK TO LOSE IN MARKET
TRADING IS A GAME
MENTAL REHEARSAL IS IMPORTANT
WON THE GAME BEFORE THEY START
The Psychology of Trading
BONANZABONANZA
“PROFESSIONAL BEST” makes WMSL the best R&D and software house for asset, treasury and risk management in Thailand.
WWW.Wealth.co.th
Wealth Management System Limited
Portfolio Management Technique (Day 1)
Course Agenda : Day 1
The Psychology of Trading
Introduction – Trader Evaluation Profile 1
Participant Introduction / Self Evaluation
Help me make the course better :Help me make the course better :
Your name……………….Your name……………….
Your career……………..Fund Mgr / Stock Analyst..etc.,Your career……………..Fund Mgr / Stock Analyst..etc.,
Technical Analysis……….1 year / more than 2 yrsTechnical Analysis……….1 year / more than 2 yrs
Fundamental Analysis......1 year / more than 2 yrsFundamental Analysis......1 year / more than 2 yrs
Participant Introduction / Self Evaluation
Trader Evaluation Profile 1…Trader Evaluation Profile 1…
Evaluating your attitude, Opinions, and Evaluating your attitude, Opinions, and ResponsesResponses
Only you can improve your performanceOnly you can improve your performance
Where / What should be improved?Where / What should be improved?
What are you right now not what you feel right answerWhat are you right now not what you feel right answer
Portfolio Management Technique (Day 1)
Course Agenda : Day 1
• The Psychology of Trading
Introduction – Trader Evaluation Profile 1
• Investment Process Technical Analysis Overview Fundamental Analysis Overview Trading System
• Money Management Reward to Risk Ratio• Risk Management Stop Loss Lock in Profit Position Limit (PVO1/VaR)• Workshop 1 : Identify Stop Loss / Lock In Profit / Reward to Risk Ratio
• Workshop 2 : VaR Calculation for Equity and Fixed Income Portfolio
Investment Process – Technical Analysis Overview
High Performance Futures TradingJoel Robbins, Editor
Investment Process – Technical Analysis Overview
Investment Process – Technical Analysis Overview
Investment Process – Technical Analysis Overview
Investment Process – Technical Analysis Overview
Investment Process – Technical Analysis Overview
Investment Process – Technical Analysis Overview
Investment Process – Technical Analysis Overview
Investment Process – Technical Analysis Overview
Investment Process – Technical Analysis Overview
Technical Analysis Overview – Trending & Trading
Investment Process – Technical Analysis Overview : Oscillator
Investment Process – Technical Analysis Overview : Volume
Investment Process – Technical Analysis Overview
Portfolio Management Technique (Day 1)
Course Agenda : Day 1
• The Psychology of Trading
Introduction – Trader Evaluation Profile 1
• Investment Process Technical Analysis Overview Fundamental Analysis Overview Trading System
• Money Management Reward to Risk Ratio• Risk Management Stop Loss Lock in Profit Position Limit (PVO1/VaR)• Workshop 1 : Identify Stop Loss / Lock In Profit / Reward to Risk Ratio
• Workshop 2 : VaR Calculation for Equity and Fixed Income Portfolio
Investment Process – Fundamental Analysis Overview
• Intrinsic Value
• P/E Ratio Vs Discount Cash Flow
• Cost of Equity / Cost of Debt / Risk Free Rate
One Up On Wall StreetPeter Lynch
SOME FAMOUS NUMBER : GROWTH RATE
Growth Rate (G = 20% + P/E 20x) vs (G = 10% + P/E 10x)
Com A (20%) Com B (10%)
Base $1.00 $1.00
Year 1 $1.20 $1.10
Year 3 $1.73 $1.33
Year 10 $6.19 $2.59
Base 20*1 = 20 (P/E 20) 10*1 = 10 (P/E 10)
Year 10 20*6.19 = 123.80 (P/E 20) 10*2.59 =26 (P/E 10)
Year 10 15*6.19 = 92.85 (P/E 15) 10*2.59 = 26 (P/E 10)
Year 10 15*9.31 = 139 (G25 P/E 15) 15*2.59 = 39 (P/E 10)
Investment Process – Fundamental Analysis Overview
SOME FAMOUS NUMBER : PROFIT MARGIN
• PROFIT BEFORE TAX: Profit Margin
• PROFIT MARGIN: Vary to Industry
Retailers (Alberton) 3.6%Drugs (Merck) 25%
: Highest means lowest cost (same industry)means staying power
Investment Process – Fundamental Analysis Overview
Investment Process – Fundamental Analysis Overview
COMPANY A
COMPANY B
Status Quo Business Improves
$100 in Sales $110 in Sales (price up 10%)
$ 88 in Costs $ 92.40 in Cost (up 5%)
$ 12 in Pretax Profit $ 17.60 Pretax Profit$100 in Sales $110 in Sales (price
up 10%)
$ 98 in Costs $102.90 in cost (up 5%)
$ 2 in Pretax Profit $ 7.10 Pretax ProfitCOMPANY A’s Profit UP 50%But COMPANY B’s Profit UP > 3 times
Investment Process : Trading SystemInvestment Process : Trading System
Rules For Trading In stocks
1. Determining the Trend
2. Buy at Single, Double and Triple Bottoms
3. Buy and Sell on Percentages
4. Buy and Sell on 3 Weeks’ Advance or Decline
5. Market Moves in Sections
6. Buy or Sell on 5 to 7 Point Moves
7. Volume of Sales
8. Time Periods
9. Buy on Higher Tops and Bottoms
10.Change in Trend in Bull Market
11.Safest Buying and Selling Points
12.Price Gains in Fast Moves 45 Years In Wall StreetWilliam D. Gann
Investment Process : Trading SystemInvestment Process : Trading System
Twenty-four never-failing rules
1. Amount of capital to use : Divide your capital into IO
equal parts and never risk more than one-tenth of your
capital on any one trade.
2. Use stop loss orders. Always protect a trade when you
make it with a stop loss order 3 to 5 points away.
3. Never overtrade. This would be violating your capital
rule.
4. Never let a profit run into a loss. After you once have
a profit of 3 points or more, raise your stop loss order
so that you will have no loss of capital.
5. Do not buck the trend. Never buy or sell if you are not
sure of the trend according to your charts.
Investment Process : Trading SystemInvestment Process : Trading System
6. When in doubt, get out, and don’t get in when in doubt.
7. Trade only in active stocks. Keep out of slow, dead ones.
8. Equal distribution of risk. Trade in 4 or 5 stocks, if possible. Avoid tying up all your capital in any one stock.
9. Never limit your orders or fix a buying or selling price. Trade at the market.
10.Don’t close your trades without a good reason. Follow up with a stop loss order to protect your profits.
11.Accumulate a surplus. After you have made a series of successful trades, put some money into surplus account to be used only in emergency or in times of panic.
12.Never buy just to get a dividend.13.Never average a loss. This is one of the worst
mistakes a trader can make.14.Never get out of the market just because you have
lost patience or get into the market because you are anxious from waiting.
Investment Process : Trading SystemInvestment Process : Trading System
15. Avoid taking small profits and big losses.16. Never cancel a stop loss order after you have placed
it at the time you make a trade.17. Avoid getting in and out of the market too often.18. Be just as willing to sell short as you are to buy. Let
your object be to keep with the trend and make money.
19. Never buy just because the price of a stock is low or sell short just because the price is high.
20. Be careful about pyramiding at he wrong time. Wait until the stock is very active and has crossed Resistance Levels before buying more and until it has broken out of the zone of distribution before selling more.
21. Select the stocks with small volume of shares outstanding to pyramid on the buying side and the ones with the largest volume of stock outstanding to sell short.
Investment Process : Trading SystemInvestment Process : Trading System
22.Never hedge. If you are long of one stock and it
starts to go down, do not sell another stock short to
hedge it. Get out at the market; take your loss and
wait for another opportunity.
23.Never change your position in the market without a
good reason. When you make a trade, let it be for
some good reason or according to some definite plan;
then do not get out without a definite indication of a
change in trend.
24.Avoid increasing your trading after a long period of
success or a period of profitable trades.45 Years In Wall StreetWilliam D. Gann
Portfolio Management Technique (Day 1)
Course Agenda : Day 1
• The Psychology of Trading
Introduction – Trader Evaluation Profile 1
• Investment Process Technical Analysis Overview Fundamental Analysis Overview Trading System
• Money Management Reward to Risk Ratio• Risk Management Stop Loss Lock in Profit Position Limit (PVO1/VaR)• Workshop 1 : Identify Stop Loss / Lock In Profit / Reward to Risk Ratio
• Workshop 2 : VaR Calculation for Equity and Fixed Income Portfolio
MONEY MANAGEMENTMONEY MANAGEMENT
ASSET ALLOCATIONTYPE : Cash/ Stock/ Fixed Income/ CommodityLOCATION : Markets/ Countries
MODEL PORTFOLIOSector DiversificationTrading System Diversification
REWARD TO RISK RATIO (RTR)
Money Management
Technical Analysis of the Futures MarketsA comprehensive Guide to trading Methods and ApplicationsJohn J. Murphy
MONEY MANAGEMENTMONEY MANAGEMENT
Money Management
Each Stock Market Cycle
5% Profit15% Break Even80% Loss
FUTURE MARKET : TOP TRADERFUTURE MARKET : TOP TRADER
WIN RATIO
BUT
THEN
NET NET
Win 40 Loss (60)
RTR 3 : 1
120 : (60)
+60
Money Management
Exercise : Stop Loss / Lock in Profit / RTR
High Performance Futures TradingJoel Robbins, Editor
Continue with..
Wealth Management System Limited
Chapter 2Chapter 2
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