Playing the stock market like a game in the casino.The exact result is unknown, and it all depends on unpredictable factors.However, the high level of income makes people and corporate executives to keep their funds in securities rather than bank accounts, because the increase in the size of the state has never bothered nobody.
But what to do to in the pursuit of additional income not to lose the most impressive (with a small reserve of funds to the stock market usually does not output)?Before getting involved in investing in certain securities, you need to create a strategy of monetary investments, as well as learn the basic rules to manage the securities portfolio, the most effective way.
First of all, you need to focus on two key indicators: rate of return and risk.If the first index should be as high as possible, then the second, respectively, as low as possible.It should be noted that the yield of the securities can not be calculated with absolute probability, so for evaluation use standard values.
All portfolio management is built on the theory of probability.You need to determine how likely bring security or that the income increase income on the corresponding probability, and all received the results add up.The result, just, and will be your expected income.
Regarding the degree of risk, it is defined as the variance (or in other words, the scatter) the expected outcomes.For example, Company A shares provide a steady income, while shares of Company B could either bring a large sum of money to the investor, or destroy it altogether.On the basis of calculations of probability, we find that the expected return from the shares of these two companies is, however, the degree of risk the company B is much higher.Thus, choosing between buying shares of A and B shares, it is wise to choose the first option.
Portfolio management, on the other hand, requires a slightly different approach.The portfolio should include both those and other stocks.The basis of the portfolio is stable stocks with relatively low levels of profitability and virtually no risk.However, in order to bring the expected profitability of the portfolio, it is diluted risky shares.Even if there is a "failure" for several positions, offset by a loss of stable income securities.
Regarding the choice of risky assets, then the portfolio management of the enterprise must lead with the maximum degree of diversification.That is, the action should not be linked.Thus, if there is any little expected risk event, it should not pull the risky stocks are all collected in the portfolio, down.
Efficient portfolio management is the identification and analysis of all possible links between the securities in order to reduce the variance of the yield of the portfolio to almost zero.For these purposes often purchased securities traded on an entirely different markets and sometimes even in different countries.
like cash management and liquidity of the company, implying an exact calculation of the probabilities of all possible, work with securities does not tolerate disregard for detail.That rigorous approach to detail distinguishes a good financial analyst.It should not be a prophet to predict the future, but it must create a portfolio that will provide the desired income of the owner, notwithstanding any disasters and economic upheavals.
