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Hi, need to submit a 1000 words essay on the topic Global Industries.Download file to see previous pages... Again when the corporation opted to invest in the equities in 2007, this was the time when t
Hi, need to submit a 1000 words essay on the topic Global Industries.Download file to see previous pages...
Again when the corporation opted to invest in the equities in 2007, this was the time when the current global financial crisis was starting and they never recovered. Proper timing and a lack of diversity in investment may be attributed to the failure experienced by the corporation (Palacios &. Musalem 2003). Given that the US economy may not improve much in the next three years, there is a need for Global Industries to consider investing in the developing economies, such has India and China. Other emerging markets in South America such as Brazil, and also Africa, may be another option worth exploring.
In the past, pension fund managers have been known to risk with the money of taxpayers in equity markets that are characterised by a high level of volatility. The operations of our pension fund system has been such that the decision to take investment risks in the equity markets is often arrived at by a few individuals at the management level but when we experience a market crash, the taxpayers have to bear this risk. Often times, pension fund managers are quick to attribute the loss of taxpayers' money on the world financial crisis and bad markets (Mangiero 2009). It is not often that pension fund managers shall be awake to the realisation that the fund may be governed by investment models that are quite faulty, coupled with crooked actuarial theories. According to a majority of the economists that specialises in the assessment of funds, such plans may at best be viewed as risk time bomb that shall in the long-run result in losses.
Inevitably, it is the taxpayer that shall be required to pay for such losses. For this reason, one could argue that the reason why we have had such a horrible experience in our pension fund is because our pension plans and models are faulty, and we have never taken the initiative to revise them accordingly (Caulkin 2009). The practice by the pension fund in the past years has been to heavily invest in equities. What appeared to have led the pension fund managers to such a decision was due to the assumption that the short-term meltdowns that they were experiencing would be offset by the ensuing financial gain in the long-term.
Apparently, these fund managers seems not to have heeded the advice of financial economists, as regards the conventional model of investment markets. that "equities provide guaranteed returns over the long term" (Pension pulse 2009). This is a goal that economists have proved to be quiet untenable. Clearly, no one anticipated a global financial crisis of the magnitude that we are faced with, at the moment. It is imperative therefore that we do not repeat past mistakes. What this means is that we should learn to diversity our investments, at least as a cushioning effect against losing all the taxpayers earnings.
In high investments such as the stocks or the equity funds, perfect timing is very important. Apparently, Global Industries appears to have opted to make investments at a time when disaster was just about to strike. Another characteristic of the past investments since the early 1990s is that the corporations have failed to adequately diversity its investments.