Context 1

Risk return is often difficult to quantify from layman's perspective. Due to the uncertainty that surround investment, equity valuation is often irrational and may not also reflect fair value. E.g. GDP is anticipated to experience -6% globally and yet recent share prices has reached historical level of valuation. There is common notion that investors often seeks pure return without consideration for risk almost always result in negative investment experience.

Value investors like Warren Buffett has resisted investing his USD 140 billion war chest and instead has choose to keep liquid asset and under performing the equity market. Extrapolate these developments. Hint: Asset pricing theory & capital asset pricing model & introduction to security valuation in 1000 w.

Context 2

Investors often seek alpha return using various cutting edge investment strategy. Some of the approaches such as value investing has yielded superior return in the past, however it hasn't been the case since post 2008. Technology companies has consistently outperformed high cash flow companies over the past 12 years. Extrapolate with sound rationale of how equity investors can consistently achieve superior return in 500 w. Hint: Company analysis and stock selection.

Context 3

Investors often seek to manage investment risk by diversifying their investment in different asset so as not to put all their eggs in a single basket. Rules base on past advocacy and proven successful investment outcome are likely to be followed faithfully by the herd-mentality of investors until proven otherwise. In 500 w, provide contrarian and supportive thought in the context of diversification. Hint: Illustrate your thinking process with sound wisdom.