Strategic Investors

The Investor (also capital investor, capital provider or investor) is an economic entity who, as a market participant in the financial market, requests a financial product for the purpose of long-term asset growth.

Generally

An investor is someone who, on the basis of public offering, public advertising or similar, acquires financial instruments from issuers or other investors on the primary market or secondary market.

This definition does not include investment in commodities, real estate, works of art or jewelry that are not traded on the financial market. Arbitrageurs, speculators or traders in the narrower sense are not investors because they are interested in short-term profit-taking, but not in long-term asset-increasing trading objects.

Economically, the terms investor and investor are fluid and can also have a different meaning. In stocks, the investor's savings become the investor's investment when someone acquires a strategic equity stake (blocking minority or majority).

Investment objectives

There are three investment goals with mutual conflicting goals, namely return, security (financial risk) and liquidity (fungibility).

In addition, there is the aim of tax avoidance for non-profit investors. This magic triangle of investment is characterized by the fact that not all three goals can be achieved equally and to the same extent. The return signals to the investor the earning power of an investment object (e.g. dividend yield, current yield), while the financial risk consists of the risk of whether and to what extent the investor will lose his invested capital must count. A high return is usually associated with a high financial risk and vice versa. Liquidity says something about how quickly an investor can convert the investment back into money without capital losses. With high returns and at the same time high financial risk, liquidity is again limited.

The investment objects can be divided into risk classes depending on the feasibility of the investment objectives. Risk-averse investors prefer security and liquidity, while those willing to take risks prefer the return and consciously accept high financial risks. In relation to the term, investment goals can be short-term (saving for the next vacation), medium-term (investment for a car purchase) or long-term (retirement provision). Even if the investor pursues the personal goal of long-term asset growth, short or medium-term investment goals do not conflict with this. If the investment horizon is not limited in time, the investment strategy must also take into account events that are considered unlikely to occur if only a limited investment period is considered, such as financial or economic crises.

Investment motivation

Financial investment

In the case of financial investments, the main motivation for the investment is the current income from the investment object or the expected increase in value in the event of a subsequent partial or full resale. If the investment relates to company shares, one speaks of a financial participation.

Strategic investment

With strategic investment the focus is on the connection of the investment object with the own business purpose.

Examples:

• Purchase of futures on commodities in order to secure your own production for the future by hedging.

• Purchase of company investments to round off your own product portfolio, expand your own customer base or merge operational tasks and processes (IT, purchasing, production, sales, administration, R&D) in order to benefit from the associated economy-of-scale effects.

Source: wikipedia.org/strategic investors