8/10/2019 Chaptcrediter 1 Overview

1/11

Security Analysis & Portfol io

Management

Dr. Anirban Ghatak

8/10/2019 Chaptcrediter 1 Overview

2/11

Investment Alternatives

Investment

Avenues

Equity

Shares

Money MarketInstruments

Life Insurance

Policies

Precious

Objects

Non-

marketable

Financial

Assets

Bonds

Mutual Fund

Schemes

Real Estate

Financial

Derivatives

8/10/2019 Chaptcrediter 1 Overview

3/11

Investment Attributes

RETURN

RISK

LIQUIDITY

TAX SHELTER

CONVENIENCE

8/10/2019 Chaptcrediter 1 Overview

4/11

Current yield Capital

appreciationRisk

Marketability/Liquidity Tax Shelter Convenience

EquityShares

Low High High Fairly high High High

Non-

convertible

DebenturesHigh Negligible Low Average Nil High

Equity

Schemes

Low High High High High Very high

Debt

SchemesModerate Low Low High

No tax on

dividendsVery high

Bank

DepositsModerate Nil Negligible High Nil Very high

PublicProvident

Fund

Nil ModerateNil

AverageSection 80 C

benefit

Very high

Life

Insurance

PoliciesNil Moderate

NilAverage

Section 80 C

benefitVery High

Residential

HouseModerate Moderate Negligible Low High Fair

Gold andSilver Nil Moderate Average Average Nil Average

Return

Evaluation Of Various Investment Avenues

8/10/2019 Chaptcrediter 1 Overview

5/11

Investment Vs. Speculation

INVESTOR SPECULATOR

PLANNING LONG SHORTHORIZON

RISK MODERATE HIGHDISPOSITION

RETURN MODEST HIGHEXPECTATION

BASIS FOR FUNDAMENTAL TECHNICALDECISIONS

LEVERAGE NO HIGH

8/10/2019 Chaptcrediter 1 Overview

6/11

CLASSIFICATI ON OF FINANCIAL MARKETS

DEBT MARKET

NATURE OF CLAIM

EQUITY MARKET

MONEY MARKET

MATURITY OF CLAIM

CAPITAL MARKET

PRIMARY MARKET

SEASONING OF CLAIM

SECONDARY MARKET

CASH OR SPOT MARKET

TIMING OF DELIVERYFORWARD OR FUTURES MARKET

EXCHANGE-TRADED MARKET

ORGANISATIONAL

STRUCTURE OVER-THE-COUNTER MARKET

8/10/2019 Chaptcrediter 1 Overview

7/11

PORTFOLIO MANAGEMENT PROCCESS

SPECIFICATION OF

INVESTMENT OBJECTIVES

CHOICE OF ASSET MIX

FORMULATION OF

PORTFOLIO STRATEGY

SELECTION OF SECURITIES

PORTFOLIO EXECUTION

PORTFOLIO REVISION

PORTFOLIO EVALUATION

8/10/2019 Chaptcrediter 1 Overview

8/11

Common Errors In Investment Management

INVESTORS APPEAR TO BE PRONE TO THE FOLLOWINGERRORS IN MANAGING THEIR INVESTMENTS.

INADEQUATE COMPREHENSION OF RETURN AND RISK

VAGUELY FORMULATED INVESTMENT POLICY

NAVE EXTRAPOLATION OF THE PAST

CURSORY DECISION MAKING

SIMULTANEOUS SWITCHING

MISPLACED LOVE FOR CHEAP STOCKS

OVER-DIVERSIFICATION AND UNDER-DIVERSIFICATION

BUYING SHARES OF FAMILIAR COMPANIES

WRONG ATTITUDE TOWARD LOSSES AND PROFITS

TENDENCY TO SPECULATE

8/10/2019 Chaptcrediter 1 Overview

9/11

Qualities for Successful Investing

CONTRARY THINKING

PATIENCE

COMPOSURE

FLEXIBILITY AND OPENNESS

DECISIVENESS

8/10/2019 Chaptcrediter 1 Overview

10/11

SUMMING UP

A bewildering range of investment avenues is available.

For evaluating an investment, the following attributes

are relevant: rate of return, risk, marketability, tax

shelter, and convenience.

A financial market is a market for creation and

exchange of financial assets.

Financial markets can be classified by the nature of

claim, maturity of claim, seasoning of claim, timing of

delivery, and organisational structure.

8/10/2019 Chaptcrediter 1 Overview

11/11

Portfolio management is a complex activity which can

be broken down into a series of steps. The stock market is thronged by investors pursuing

diverse investment strategies.

Investors are prone to various errors

The qualities of contrary thinking, patience,

composure, flexibility, and decisiveness are required tosucceed in the investment game.