Management of Market Assets in Crisis

Abstract

Introduction, Purpose. Most of the classic and modern investment models do not take into account the crisis processes in the economy. This happens mostly because crises are not studied well enough and serious researches are to be made in this sphere.

Methods. This paper offers a model for estimating the market condition, considering the five edge states: crisis growth, growth, stagnation, recession, crisis recession. In this paper has been developed a crisis indicator, which can be the basis for determination of the crisis initial phase.

Results. A concept of a dynamic portfolio model, adapting to the market changes, has been introduced to manage market assets. Adaptation of the investment portfolio occurs according to the crisis processes in economy. Investment is understood as a process of buying assets for profit-making. The term “strategic investment” is used to refer to long-range investments. Financial assets exist in various forms and may range from almost completely safe low yield government bonds to international assets that are at much greater risk and produce more profit.

Discussion. Usually investor owns an assets bundle. A set of financial assets, bounded by a single investment strategy, is called an investment portfolio. Warren Buffett states that a profitable investment strategy should be long-ranged with selection of the right assets. For managing the market assets the authors suggest the use of the dynamic investment strategy which adapts to the crisis.