SECURITY ANALYSIS & PORTFOLIO

MANAGEMENT
A Saving : A part of earning forgone or sacrificed consumption today.

An Investment: An activity that commits fund in any financial/physical

form in the present with an expectation of receiving
additional return in the future.
An Instrument
Literary Meaning : A well recorded financial/legal document
Financial Meaning: Funds raised from a large body of lenders, documents
issued called instrument.
A Security:
Literary Meaning: Some thing that provides safety
; Pledge for repayment of a loan
Financial Meaning: Where an instrument has a ready market, as in case of
Govt. bonds or equity shares,the instrument is called a
security.

Primary/Derived…. Ownership/Debt…… Gilt edged/Govt. Security….

Security Analysis
Numerous securities (7,000 listed Companies)
Newer & Newer forms of securities are coming in to existence.
Besides old ownership securities viz. equity, preference share &
Debt securities viz. debenture, bond etc.

New forms of securities such as

Convertible Debentures Deep Discount Bonds Zero coupon Bonds
Floating Rate Bond Euro Currency Bonds Flexi Bonds

Global Depository Receipts American Depository Receipts

Large varieties of Mutual Funds& so on
Security Analysis means examining the risk return characteristics of
individual securities

Fundamental Analysis & Technical Analysis

A Portfolio

Literary Meaning:
1. A portable case for keeping loose papers
2. Office of a minister of State

Financial Meaning:
A combination or group of securities for the purpose of
investment is referred to as a Portfolio
Investment & Speculation

 An investment is one which upon thorough analysis

promises safety principle and an adequate return

 One not fulfilling this, is speculation.

 Unlike gambling, it is not based on random outcomes.

Investment & Gambling

 Gambling is putting money at risk by betting on

an uncertain outcome with the hope of winning
money.
Investment Process

 Setting Investment Policy

 Time Horizon, Risk Tolerance, Portfolio Mgmt Style
 Performing Security Analysis
 Fundamental Analysis & Technical Analysis
 Portfolio Construction
 Portfolio Revision
 Portfolio Performance Evaluation
Investment Risks

 Credit
 Inflation
 Interest Rate
 Market Risk
Common Errors in Investment
Management

 Not having a clearly defined Investment Plan

 Not coping up with drastic changes
 Profit booked not realized at a right time
 Overdosing of information
 Shortcuts & Gimmicks
Qualities of a Smart Investor

 Proper investment plan

 Consistent Investment
 Patience
 Keeping away of emotions.