Ally is a fashion designer her late 30s that plans to retire within 20 years. She enjoys a very “in” lifestyle and likes to hang out with the “in-crowd” in the “in” nightspots whenever she has time off her busy schedule. Her tastes are very contemporary and she always likes to live in the most popular neighborhood in her city, L.A. In the last four years, she has moved five times. In her personal and professional life, Ally is always worried about being part of the young, fashionable and popular elite and will go any length to fit in. Although highly intelligent, she does not know much about investing and has come to you as a client, because you were recommended by one of her clients from Hollywood. She wants you to set up an investment portfolio for her that mimics those of Hollywood stars. a. How would you characterize Ally as an investor? b. You have been trying to convince Ally that what is popular is not necessarily the best investment, and that sometimes a contrarian investment style may be appropriate. Present an argument in which you are trying to convince Ally to try a contrarian investment strategy.
Ally is a fashion designer her late 30s that plans to retire within 20 years. She
enjoys a very “in” lifestyle and likes to hang out with the “in-crowd” in the “in”
nightspots whenever she has time off her busy schedule. Her tastes are very
contemporary and she always likes to live in the most popular neighborhood in
her city, L.A. In the last four years, she has moved five times. In her personal and
professional life, Ally is always worried about being part of the young,
fashionable and popular elite and will go any length to fit in. Although highly
intelligent, she does not know much about investing and has come to you as a
client, because you were recommended by one of her clients from Hollywood.
She wants you to set up an investment portfolio for her that mimics those of
Hollywood stars.
a. How would you characterize Ally as an investor?
b. You have been trying to convince Ally that what is popular is not
necessarily the best investment, and that sometimes a contrarian
investment style may be appropriate. Present an argument in which you
are trying to convince Ally to try a contrarian investment strategy.
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