Vital to consider risk appetite while investing

Through this article we are sure that the 'investment process' we have outlined herein would help many investors strike the correct chord.

Before we understand the term risk appetite , let us try to understand by what is meant by "risk". To put it simply, risk is a result or outcome which is other than what is / was expected. While you assume risk as an investor, you could either make gains or suffer a loss; thus risk is nothing more than a state of uncertainty, and exists in every facet of life- including investments.

The term "risk appetite" refers to one's willingness to take risk. But it doesn't merely end with willingness to make a prudent investment decision; but in fact needs to be backed by a rationale considering risk determinants such as the following: 

Age:
Your age plays a vital role to determine your risk appetite. Thus the younger you are, more risk you can take and vice-a-versa. This is because you are in the accumulation or earning stage of your life cycle, where you have more number of working years before you retire. Likewise, if you start investing at an early age the tenure which you get (while investing in an investment avenue) is greater, which enables you to make more aggressive investments and create wealth over the long-term to meet your financial goals.

Income:
Similarly, your income too is an important determinant to gauge your risk appetite. This is because if you income is high enough, you can afford to take high risk and vice-versa.

Expenses:
Your outgoings also influence the risk which you can afford to take while investing. Thus although you may be having a high income, but your disposable income is petite you could be refrained from taking risk.

We think that in order to keep your financial health in pink in the long-term, it is important that you live within means and curtail your unnecessary expenses. It is this strategy which will enable you save a large portion of your monthly earnings, which can be deployed in suitable asset classes.

Nearness to goal:
Also if your investments are driven by an objective to meet a financial goal, that too would be a determinant for gauging your risk appetite. Thus if you are many years away from the financial goal you could afford to take more risk, while if you are not many years away from the financial goal you could be risk-averse.

Thus ascertaining risk appetite is a combination of these aforementioned factors, and equation of all these can help you test your risk tolerance.

It is noteworthy that while there are investment opportunities and avenues galore, you ought to take care and ensure that you are not cooking a recipe for disasters. As mentioned earlier, while there is information galore on investment avenues you ought to adopt caution and ensure that you are taking a wise investment decision which suits your needs and risk profile. There is no point in being carried away by an investment opportunity which has being hyped (even though it may be really worth it), if does not suit your risk profile. Moreover one should be wary of investment opportunities which harp on returns and does not emphasise on the risk involved.  As a matter of fact, in the absence of information related to risk, information isn't just incomplete, it's downright misleading.

So the next time you hear or read of investment opportunities and avenues ask yourself a simple question "Does this investment opportunity or avenue suit my risk profile, although it may deliver luring returns?" Remember, investing is not about how much return you like, but how much returns you can safely handle.

PersonalFN is a Mumbai based Financial Planning and Mutual Fund Research Firm

Astellas Launches Xtandi in the UK - Analyst Blog

Astellas Pharma, Inc. (ALPMY) recently announced the launch of its prostate cancer drug, Xtandi, in the UK.

Xtandi had gained EU approval in late Jun 2013 for the treatment of adult men with metastatic castration-resistant prostate cancer (CRPC) whose disease has progressed on or after Sanofi's (SNY) Taxotere (docetaxel) therapy. Approval was based on encouraging results from a randomized, placebo-controlled, multicenter, phase III study (AFFIRM) which evaluated the safety and efficacy of the drug versus placebo.

The study not only met the primary and secondary endpoints but Xtandi's safety profile was also found to be favorable. Xtandi was also approved in Japan and the US for the same indication in Jun 2013 and Aug 2012, respectively.

According to Cancer Research UK, prostate cancer is estimated to be the second most common cause of cancer death in men in the UK.

Medivation, Inc. (MDVN) entered into a deal with Astellas, for the development and commercialization of Xtandi, for the treatment of prostate cancer, in Oct 2009. While all US development and commercialization costs and profits will be shared equally, Astellas will be responsible for the ex-US development and commercialization of Xtandi.

Medivation is currently working on expanding Xtandi's label. A phase III study (PREVAIL) in chemotherapy-naïve advanced prostate cancer patients is currently ongoing with data read-outs expected later this year. Medivation is also exploring Xtandi for breast cancer (phase II). Xtandi delivered net sales of $75.4 million in the first quarter of 2013, $18 million above the last quarter of 2012.

Astellas carries a Zacks Rank #4 (Sell) while Medivation carries a Zacks Rank #3 (Hold). Right now, Jazz Pharmaceuticals (JAZZ) looks well positioned with a Zacks Rank #1 (Strong Buy).

Stock Bubble Driven by Central Banks to Burst in 2014, Analyst Warns

As Federal Reserve officials pursue the most aggressive monetary policy stimulus campaign in their institution’s history, they are mindful of the unintended consequences their actions can have on financial markets.

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But as it now stands, most remain confident that huge injections of money into the economy haven’t created any bubbles big enough to threaten the overall course of the recovery. That has allowed them to press forward with their aggressive agenda of bond buying, which is aimed at pushing up asset prices in a bid to boost growth and lower unemployment.

Against that confidence, an equities strategist is warning of a major bubble in global stock prices. In a research note, Nomura Securities strategist Bob Janjuah is warning that over the final three quarters of next year and into 2015, there “could be a 25% to 50% sell off in global stock markets.”

Mr. Janjuah, who is co-head of macro strategy research at Nomura, sees a lot to worry about, and he sees central banks, including the Fed, at the center of the factors that eventually will bring woe to stocks.

“The major themes are unchanged–anaemic global growth/mediocre fundamentals, what I consider to be extraordinarily and dangerously loose monetary policy settings, very poor global demographics, excessive debt, an enormous misallocation of capital driven by the state sponsored mispricing of money/capital, and excessive financial market/asset price speculation at the expense of any benefit to the real economy,” the analyst says.

Mr. Janjuah says markets are now priced entirely for good news, leaving them vulnerable to adverse developments. But the main driver of the coming bursting of the stock market bubble, as the Nomura analyst sees it, is a much delayed rebalancing of the global economy as central banks pull back from all of their aggressive stimulus activities.

“The next five years has to be about a rebalancing towards the ‘real economy’ and the bottom 90%, at the expense of the top 10%,” Mr. Janjuah writes. “This shift in policy emphasis will not be a happy time for financial markets and speculators while the transition happens,” he says.

Fed officials don’t offer predictions of future equity price movements. But they do believe that rising asset prices boost the so-called wealth effect. As consumers feel richer, they feel emboldened to spend more, which lifts the broader economy. To that end, they have been pursuing very aggressive bond-buying policies while offering guidance on short-term rates that suggest monetary policy will be very easy for years to come.

Over the course of this year, speculation about the Fed easing back on its bond buying generated considerable market volatility. Some officials welcomed this because they said it helped correct market complacency about future Fed policy while flushing out some pockets of excess in some corners of the bond market. But Fed officials also came to lament the move as they saw higher borrowing costs creating fresh headwinds for an economy that wasn’t growing fast enough to begin with.

In an interview Monday, Federal Reserve Bank of St. Louis President James Bullard said when it comes to market levels, “I think we are at a good place right now.” He put himself in the camp of those who see some value in the rise in bond yields, saying the levels seen at the start of the year were so low that they were a bit worrisome.

That said, the veteran central banker said the bubble issue remains challenging for Fed officials. “I don’t think we’ve come up with a really great answer” when it comes to dealing with markets that have gone out of line with fundamentals, Mr. Bullard said.

Why EWZ Is Poised to Bounce Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, the iShares MSCI Brazil Index Fund (NYSE: EWZ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at EWZ, and see what CAPS investors are saying about the ETF right now.

EWZ facts

Inception	July 2000
Total Assets	$5.8 billion
Investment Approach	Seeks investment results that correspond to the price and yield performance of the MSCI Brazil 25/50 Index. A capping methodology is applied that limits the weight of any single component to a maximum of 25% of the MSCI Brazil 25/50 Index.
Expense Ratio	0.6%
Dividend Yield	3.1%
1-Year / 3-Year / 5-Year Returns	(17.2%) / (9.7%) / (9.3%)
Alternatives	Market Vectors Brazil Small-Cap  SPDR S&P Emerging Latin America

Sources: Morningstar and Motley Fool CAPS.

On CAPS, 98% of the 2,074 members who have rated EWZ believe the ETF will outperform the S&P 500 going forward.

Just last month, one of those bulls, fellow Fool Matthew Argersinger (TMFMattyA), tapped EWZ as a particularly attractive bargain opportunity:

Emerging markets have sharply underperformed over the last two years, and Brazil is no exception. The Brazilian stock market is down something like 21% YTD. Here's betting on a turnaround and that the World Cup (2014) and Olympics (2016) will play a major role in reviving Brazil's economy.  

Owning exceptional ETFs is a surefire way to secure your financial future. Of course, despite a strong four-star rating, EWZ may not be your top choice.

If that's the case, our special report on ETFs highlights three funds that are poised to soar in the next recovery. It's 100% free, but won't last forever, so click here to access it now.

T-Mobile Increases Spectrum Holdings

T-Mobile US (NYSE: TMUS  ) has agreed to purchase 10 MHz of Advanced Wireless Services spectrum from U.S. Cellular (NYSE: USM  ) for $308 million, T-Mobile announced today.

That AWS spectrum can serve 32 million people in the Mississippi Valley region. The 29 markets covered include St. Louis, Nashville, Kansas City, Memphis, Lexington, Little Rock-North Little Rock, Birmingham, New Orleans, and Louisville.

"This is a rare opportunity to secure precious AWS spectrum in key markets that will immediately be put to use by both T-Mobile and MetroPCS customers," said T-Mobile CEO John Legere. The deal still needs approval from the Federal Communications Commission and Justice Department. The companies expect the transaction to close in the fourth quarter.

T-Mobile recently merged with MetroPCS to create publicly held T-Mobile US. Before the merger, the previously named T-Mobile USA was a private company held by German company Deutsche Telekom. Deutsche Telekom  holds 74% of the newly formed company.

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