what principles lies on portfolio theory&Management
There are two basic principles for effective portfolio management which are given below:-
- Effective investment planning for the investment in securities by considering the following factors-
- Fiscal, financial, and monetary policies of the Govt.of India and the
Reserve Bank of India
- Industrial and economic environment and its impact on the industry
Prospect in terms of prospective technological changes, competition in the market, capacity utilization with industry and demand prospects, etc.
II. Constant review of investment: Its require to review the investment in securities and to continue the selling and purchasing of investment in a more profitable manner. For this purpose they have to carry the following analysis:
a. To assess the quality of the management of the companies in which investment has been made or proposed to be made.
b. To assess the financial and trend analysis of companies' balance sheet and profit&loss Accounts to identify the optimum capital structure and better performance for the purpose of withholding the investment from poor companies.
c. To analysis the security market and its trend on a continuous basis to arrive at a conclusion as to whether the securities already in possession should be disinvested and new securities are purchased. If so the timing for investment or disinvestment is also revealed.
All functions are basically based on the above principles, hence keep it in your mind.
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