FRANKLY SPEAKING, THE GLOBAL MARKET IS NOT LOOKING

VERY GOOD AT THE MOMENT. The world is falling ever deeper into
debt. The United States, Japan and Europe are trying to reinvigo-
rate their economies to avoid an even bigger economic crash. Central
banks are printing money and nominal interest rates are close to zero.
Many developed countries are heavily indebted and the debts are ris-
ing by the month.
In times like these it doesnt pay to be passive. To the contrary,
if you have the right kind of investment portfolio, you may be able
to generate some great revenue, says Vesa Puttonen, Professor of
Finance at the Aalto University School of Business.
Exceptional times in the market mean exceptional opportunities:
it is now possible to accrue wealth in ways
other than through inheritance.
My advice at the moment would be
not to invest in treasury bonds. Revenues
are close to zero, countries are heavi-
ly indebted and when ination expecta-
tions rise so do interest rates, and that
decreases the value of treasury bonds,
says Puttonen.
He also emphasises the importance of
analyzing the content of each investment
asset. Dont buy just stocks.
Puttonen says that there are expen-
sive stocks and there are cheap stocks
and the same goes for real estate markets.
Real estate in Germany is a better invest-
ment just now than real estate in France
or Spain, he says.
T
E
X
T
:

S
A
T
U

R

LIFE IS
A RISKY
BUSINESS
Risky
times, good
investments
Fore more investment tips, check out
Puttonens latest book, Velka tikitt
hydy siit!, published in Finnish in
December 2012 by Aalto University
Executive Education.
www.aaltoee./en/shop
Fore more iinvestment i tips h che k ck out
We face crossroads every day with more and more options
to choose from. Find out where you are, decide the direction
and start making the moves. Risk equals potential.
1
23
You can use Toolbox materials at work or when giving
a presentation, link them to your blog or forward the
entire Toolbox to your colleagues. The background
ideas are available in a variety of web sources.
As slides:
www.slideshare.net/AaltoEE
In pdf format:
www.scribd.com/AaltoEE
The whole
magazine:
aaltoee./prole
Tips for
your
investment
portfolio
Find out
your nancial
risk tolerance
23
AALTO EE STARTED
PUBLISHING
its own series of
business books
and case studies
in 2012. The rst
book to come out
was on leadership
and management,
titled Johtajuuden
seitsemn synti
(The Seven Sins
of Management).
Currently, all
publications are in
Finnish only, but in
the future Aalto EE
will also be bringing
out works in English.
Before you start planning your
personal investment strategy,
you have to have an idea of your
risk tolerance.
By matching your portfolio risk to your personal
tolerance for risk, you can sleep at night without
stressing over your investments. Knowing your
risk tolerance and sticking to investments that
dont exceed it should keep you from total nan-
cial ruin.
Take this quiz and
nd out where you
stand:
njaes.rutgers.edu/
money/riskquiz/
anno nsrnun
iImo IriXvXIxrx
rrn mniiItn
nrxuII iInxrx
IsX nmuuosIus
1*5$,66'(0
4(+54(/<0
4:05+<
VESA PUTTONEN GIVES AN EXAMPLE
OF AN INVESTMENT PORTFOLIO
IN THE CURRENT MARKET SITUATION.
t Government bonds 0%
Low yields with high risk.
t Corporate bonds 20%
Relatively attractive yields, companies can
adjust their operations better than governments.
t Money market investments 10%
It is a good idea to keep some cash.
t Gold 10%
Gold does not have any cash ow and its price
is hard to predict. However, I would not dare
buy gold, so I would say 10%.
t Commodities 20%
When ination begins to rise, raw material
prices will go up.
t Equities 30%
Companies are more exible in adjusting their
operations than governments.International
American and European companies are strong
in general. Select the stocks carefully, do not
buy overpriced stocks.
t Real estate 10%
In Germany, for example, real estate prices are
relatively low at the moment.
The quiz was developed by
two personal nance pro-
fessors, Dr. Ruth Lytton at
Virginia Tech and Dr. John
Grable at Kansas State
University.
3
2
VIRTUALIZATION, CLOUD COMPUTING,
SOCIAL MEDIA, MOBILE DEVICES, THE
RISE OF EMERGING MARKETS, THE
FINANCIAL CRISIS, OFFSHORING
Information security faces many rapidly
accelerating challenges. In too many
companies, information security and risk management is
like putting out a re. There is a lack of long
term commitment, security management
and measuring, says Antti Herrala, Ernst
& Youngs IT Risk & Assurance Leader in
Finland.
However, it is often said that the weak-
est link in information security processes
is the human element. According to Ernst
& Youngs newly published 2012 Global
Information Security Survey, 37% of respondents think the
threat that has most increased their organizations risk ex-
posure is careless or unaware employees. In addition, the
number of real incidents caused by inadvertent employee
data loss has risen by 25% in the last year.
No matter how good and detailed information security
systems a company has, they can be destroyed in no time.
Herrala gives a few simple but vital guidelines that
everyone should follow in their workplace to minimize
the risk of information leaks:
t Read the companys information security policies and
guidelines.
t Put thought and eort into passwords. A password
on a Post-it is an absolute no-no.
t Work computers are for work use only. Do not, for
example, try to download any applications on to your
work computer. Have a separate computer for home
use.
t Be careful when sharing employer-related information
on social media. Inventive companies have social
media guidelines that show what work and employer-
related issues can and cannot be published on the
Internet.
4
5
Avoid being
the
weakest
link
IT PAYS OFF TO IMPROVE ONES
ABILITY TO FORECAST BETTER:
when something is predictable, it is
also designable.
There is a lot of data out there.
But what does it all mean? Random
patterns are not always meaningful,
claims statistician, political
forecaster and contributor to The
New York Times Magazine, Nate
Silver. Statistics are only as good as
the people who apply them.
According to Silvers recently
published book, The Signal and
the Noise, those who are good at
predicting have at least one thing in
common: they recognize that their
knowledge of the world is imperfect.
We take in much more
information than our brains can
process. Biases based on
expectations or self-interest
aect our analyses. The best
way to understand the world
is to take in new information
as it comes and rene your own
perceptions accordingly.
The Signal and the Noise:
Why So Many Predictions Fail
But Some Dont? (Penguin) was
named Amazons #1 Best Book
of 2012.
A book that
will teach you
how to forecast
and look to the
future better
25
Listen to
podcasts
CHECK OUT
www.startupcompass.com
Start-up founder,
predict your
success
WOULD YOU LIKE TO KNOW how your companys key
performance indicators stack up against your peers?
A benchmarking tool, Startup Compass,
combines scientic study of the way start-ups operate with
tools which help start-up founders improve their chances of
success.
Startup Compass enables start-ups and their founders to
evaluate their progress in relation to others in the eld and
support better decision-making.
It generates analyses that measure a start-ups key
performance indicators against other similar companies. This tool
quickly gives an in-depth review of the companys risk prole and
venture fundability.
BEHAVIOURAL ECONOMIST
DAN ARIELY has an interesting
weekly podcast called Arming
the Donkeys. These podcasts
are chats with researchers
in the social and natural
sciences. Short podcasts give
you fresh ideas and help you
make better decisions.
Why doesnt willpower work?
Are we more likely to cheat
after doing something good?
Why do we not save more?
How is it we keep fooling
ourselves? Listen and learn.
CHECK OUT
http://bit.ly/
danarielypodcast
6
7
8
8
Why do
you fail to
have a great
career?
YOU ARE NOT PURSUING YOUR PASSION,
answers Larry Smith, a Professor of Economics
at the University of Waterloo in Canada.
The most important thing in having a great
career is to nd your passion and follow it.
And passion is not the same as interesting.
You dont go to your loved one and say, marry me,
you are interesting!
Looking for passion (and a great career):
http://bit.ly/donotfail
CHECK OUT