Financial Investment Timing Strategies Under the Influence of Countries Economical Cycle. The Case of Lithuania

Abstract

After the analysis of scientific studies and evaluation of available research results, which all of them confirm the investors' financial management efficiency based on well timed management of investment decisions, main problem is identified -investor's choice of investment instruments under influence of different economic cycle periods. The purpose of article defined -to select the appropriate financial investment timing strategies according countries economical cycle stages, based on the case of Lithuania economical cycle. After the financial investment timing strategies analysis, equity shares and funds were assigned for economic growth period; meanwhile commodities, bonds and deposits in the banks were assigned for recession period. The results of Hodrick-Prescott filter application showed, that Lithuanian economical cycle continued from 2004 Q2 till 2010 Q1. These periods can be viewed as the effective timescales of financial investment and strategies defined can be used to reflect investment decisions according country's economical cycle. Research methods used are based on systematic literature analysis, mathematical statistics methods, logical comparative and generalization analysis.

Behavioural Finance Efficiency Under the Influence of Country’s Economic Cycle

“…According to the results of Adamauskas and Krusinskas (2012) analysis, although the average annual population was declining, the average annual amount of deposits increased, which shows that during this period statistical Lithuanian kept enough revenue for savings. The part of deposits for one statistical resident increased from 1.144,28 LTL in 2004 to 3.534,48 LTL in 2010.…”

“…According to problematic of this article and model structure mentioned before, theoretical issues must be analysed. After the analysis of main investment management solutions and its efficiency under the influence of country's economical cycle, Adamauskas and Krusinskas (2012) argues, that many mathematical tools can be used to identify country's economical cycle periods, however, after the overlook of science literature Hodrick-Prescott filter was selected, which helps to get "gentle" non-linear graphical sequence in the analysis of sensibility of periodical fluctuations in short and long terms. French (2001) argues that the sensibility of trend is obtained under the modification of multiplayer Ȝ (the frequency of period) in short term.…”

“…After Adamauskas and Krusinskas (2012) research of financial investment timing strategies analysis, equity shares and funds were assigned for expansion period; meanwhile commodities, bonds and deposits in the banks were assigned for contraction period. It must be mentioned, that risks of each instrument are estimated for those strategies.…”

“…According to Adamauskas and Krusinskas (2012), economic cycle research is one of the most popular topics of scientific literature discussions over the last years encompassing global economy long-term grow and recession starting from 2007. Such cycles can also be observed in personal finance management -unsustainable and inefficient savings management can be noticed in the conservative countries.…”