The Investment Decision Process and Investment Strategies

INTRODUCTION To make an investment decision, the investor must follow a few steps. These steps constitute the investment process, which broadly describes how investors choose among the various securities, how much money to allocate to each security, and when to make the investment. In the previous chapter we discussed the three broad categories of fi nancial assets that the investor has at his or her disposal in addition to other marketable securities like money market instruments, government securities, real estate, and commodities. The marketable securities are discussed in detail in Chapter 5.