Security Analysis & Portfolio Management.pptx

This presentation introduces the capital market, covering primary and secondary markets, stock exchange functioning, trading of securities, regulatory framework, investor types, and approaches to security analysis. It provides conceptual clarity and practical insights into security analysis and portfolio management.

1. Security Analysis & Portfolio Management: An Overview What Are Securities? Assets representing financial value that are tradable and fungible Main types: Debt securities (bonds), Equity securities (stocks), and Derivatives (futures, options) Example: Bonds have fixed interest, maturity dates; equities represent ownership in companies

2. Understanding Security Analysis The process of evaluating financial instruments to determine their value and market impact Helps investors assess risk and return of assets in a portfolio Three main approaches: Fundamental Analysis: Examines financial statements, market conditions, and business factors Technical Analysis: Studies historical price trends and market data to forecast prices Quantitative Analysis: Uses numerical data and statistical models for evaluation

3. Fundamental vs Technical Analysis Fundamental: Focus on company health, earnings, competitors, and economic indicators Technical: Focus on price charts, volume, and market sentiment Both methods guide investment decisions but from different perspectives

4. Fundamental vs Technical Analysis Fundamental: Focus on company health, earnings, competitors, and economic indicators Technical: Focus on price charts, volume, and market sentiment Both methods guide investment decisions but from different perspectives What Is Portfolio Management? The art and science of selecting and overseeing a collection of investments to meet long-term financial goals Balances risk and return by diversifying across asset classes and securities Managed by professionals or individuals with clear objectives and risk tolerance

5. Markowitz’s Modern Portfolio Theory (MPT) Proposed by Harry Markowitz in 1952 Emphasizes diversification to optimize returns for a given level of risk Portfolio efficiency: highest expected return for lowest possible risk Uses statistical measures like variance and covariance of asset returns

6. Portfolio Management Process Understand client’s investment objectives and risk profile Asset allocation: deciding proportions in stocks, bonds, cash, etc. Security selection: choosing specific investments within asset classes Portfolio construction and diversification Monitoring, rebalancing, and performance evaluation

7. Types of Investors & Investment Products Individual vs Institutional investors (pension funds, endowments) Investment vehicles: mutual funds, ETFs, hedge funds, private equity Active management aims to outperform benchmarks; passive management tracks indexes

8. Key Concepts in Portfolio Management Asset Allocation: Spreading investments to reduce risk Diversification: Avoiding “all eggs in one basket” Risk Measures: Beta (volatility relative to market), Alpha (excess return) Benchmarking: Comparing portfolio performance to standards like S&P 500

9. Conclusion: Why Security Analysis & Portfolio Management Matter Enables informed investment decisions balancing risk and reward Helps build resilient portfolios aligned with financial goals Foundation for careers in finance, wealth management, and entrepreneurship Continuous learning and adaptation essential in dynamic markets