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Investment Modeling is the process of deriving the value of a set of public securities, taking into consideration factors such as risk, liquidity, valuation and correlation with other securities. It involves more broad comparisons than typically performed in financial modeling, so the data is typically too vast for a spreadsheet.
Synonym: systematic investing, quantitative investing
For context, it's important to realize that technology has made a slow but consistent impact on the invesment industry since the 1950s. Since then, the number of professional and individual investors who utilize computers to select investments has grown substantially. There are many buzzwords that refer to versions of investment modeling; including, smart beta, algorithmic investing and quantitative modeling.
Investment modelers typically go beyond the limits of a spreadsheet and use computer programs to evaluate many different varibles for many different companies. This approach benefits from a more structured, consistent and unbiased process than subjective investing does.
Doc: Investment modeling helps to explain how the
whole investment process is performing, not just one or several stocks.
Ali: Isn't that really all clients should care about?
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Still unclear on Investment Modeling, well we have a free tutorial series with 27 videos and a freely available data set to be used in Excel. See Quant 101.
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