Four Approaches to Information Technology Infrastructure Investment

FOUR APPROACHES TO INFORMATION engineering al-Qaeda coronation Presented by Kemeasoudei Fanama (u0856287) WHAT IS INFORMATION TECHNOLOGY? Information technology is be as the understand, design, development, implementation, support or management of computer- based information systems, especially software applications and computer hardware. IT deals with the ingestion of electronic computers and computer software to convert, store, transmit, process, entertain and securely retrieve information. APPROACHES TO INFORMATION TECHNOLOGY INFRASTRUCTURE INVESTMENT 1.Fundamental get down The rudimentary tenets of the fundamental approach, which is perhaps most commonly advocated by enthronization professionals, are as follows There is an ingrained value of a tribute and this depends upon underlying economic (fundamental) factors. The inbuilt value can be naturalised by a penetrating abstract of the fundamental factors relating to the comp each, industry, and economy. At any given request of time, in that respect are some securities for which the prevailing securities industry worth would differ from the intrinsic value.Sooner or later, of course, the foodstuff price would guide in line with the intrinsic value. ? ? ? Superior returns can be bring in by buying under-valued securities (securities whose intrinsic value exceeds the market price) and selling over-valued securities (securities whose intrinsic value is less than the market price). APPROACHES TO INFORMATION TECHNOLOGY INFRASTRUCTURE INVESTMENT (continued) 2. Psychological set out The psychological approach is based on the supposition that stock prices are guided by emotion, rather than reason.Stock prices are believed to be influenced by the psychological humour of the investors. When greed and euphoria sweep the market, prices revolt to dizzy heights. On the other hand, when fear and despair envelop the market, prices pass to abysmally low levels. Since psychic values appear to be much important than intrinsic values, the psychological approach suggests that it is more profitable to discerp how investors tend to behave as the market is swept by waves of optimism and pessimism which count to alternate. The psychological approach has been described vividly as the castles-in-air theory by Burton G.Malkiel. Those who subscribe to the psychological approach or the castles-in-the-air theory generally use some form of technical analysis which is concerned with a study of internal market data, with a view to developing trading rules aimed at profit-making. The basic premise of technical analysis is that there are definite persistent and recurring patterns of price movements, which can be discerned by analysing market data. Technical analysts use a variety of tools like bar chart, point and figure chart, moving average analysis, breadth of market analysis, etc.APPROACHES TO INFORMATION TECHNOLOGY INFRASTRUCTURE INVESTMENT (continued) 3. Academic Approach Over the last quintuplet decades or so, the academic community has studied various aspects of the enceinte market, especially in the advanced countries, with the help of fairly sophisticated methods of investigation. While there are many unresolved issues and controversies stemming from studies pointing in different directions, there appears to be substantial support for the following tenets. Stock markets are passably effective in reacting quickly and rationally to the flow of information.Hence, stock prices reflect intrinsic value fairly well. Put differently Market price = inhering value Stock price demeanour corresponds to a random walk. This style that successive price changes are independent. As a result, past price behaviour cannot be used to predict future price behaviour. In the capital market, there is a positive relationship between stake and return. more than specifically, the expected return from a security is linearly link to its systematic risk. Stock price behaviour corr esponds to a random walk. This nub that successive price changes are independent.As a result, past price behaviour cannot be used to predict future price behaviour. In the capital market, there is a positive relationship between risk and return. More specifically, the expected return from a security is linearly related to its systematic risk APPROACHES TO INFORMATION TECHNOLOGY INFRASTRUCTURE INVESTMENT (continued) 4. ? Eclectic Approach The eclectic approach draws on all the three different approaches discussed above. The basic premises of the eclectic approach are as follows Fundamental analysis is helpful in establishing basic standards and benchmarks.However, since there are uncertainties associated with fundamental analysis, scoop shovel reliance on fundamental analysis should be avoided. Equally important, high-spirited refinement and complexity in fundamental analysis must be viewed with caution. ? Technical analysis is useful in broadly gauging the prevailing mood of inve stors and the relative strengths of supply and demand forces. However, since the mood of investors can vary erratically excessive reliance on technical indicators can be hazardous.More important, complex technical systems should ordinarily be regarded as suspect because they often compensate figments of imagination rather than tools of proven usefulness. The market is neither as well ordered as the academic approach suggests, nor as speculative as the psychological approach indicates. While it is characterised by some inefficiencies and imperfections, it seems to react reasonably efficiently and rationally to the flow of information. Likewise, despite many instances of mispriced securities, there appears to be a fairly strong correlation between risk and return. ? give thanks YOU