An investment refers to the commitment of funds at present, in anticipation of some positive rate of return in future. Today the spectrum of investment is indeed wide. An investor is confronted with array of investment avenues. Among all investment, investment in equity is best high proportion. This is because the history of stock market world over is booms and bursts over night millionaires an instant pauper.
An Indian stock market has been no different. Memories of its crash of December 1990 are still there in the minds of many. After record rise in proceeding few years the index fell precipitously and investor loss heavily. This phenomenon repeated every now and then. Though the equity cult is fast spreading among the investor the hard fact is majority of stocks continue to remain volatile to date. All these are pointers to the fact that the investor market is no longer holding an olive branch to investor in equity. Much of the danger associated with it can be avoided and it need not be such nerve raking experience, provided one approaches it as a rational decision making process. In short Security analysis and portfolio management are hard work, requiring discipline and patience, and the work is not always rewarded with exceptional returns.
An investment is a commitment of funds made in expectation of some positive rate of return in future. An investor makes some sacrifice in the present in the hope of desiring benefits in future. The motive behind investment varies from person to person. Some people invest in order to gain a sense of power or prestige. Often the control of corporate enterprises is a driving motive. For most investor however their interest in investment is largely pecuniary to earn a return on their money. But the return on stock market security is subject to risk. Risk in this case refers to the uncertainty surrounding actual realization of the rate of return offered by an investment. The time element refers to period of waiting required to reap the return. Accordingly early investment decision has three key aspects.
[...] Therefore rupees 100 after one year = 100/100 + R and if R = then 100/112 = .0893. Technical Approach Technical analysis is an alternative approach to predicting the stocks price behavior. Technical analysis is frequently used as a supplement to fundamental analysis rather than as a substitute for it. Thus technical analysis can frequently does, confirm findings based on fundamental analysis. Technical analysis is viewed mainly through price and volume statistics. It helps in measuring price volume, supply demand relationship for overall market as well as for individual stocks. [...]
[...] Some people invest in order to gain a sense of power or prestige. Often the control of corporate enterprises is a driving motive. For most investor however their interest in investment is largely pecuniary to earn a return on their money. But the return on stock market security is subject to risk. Risk incase refers to the uncertainty surrounding actual realization of the rate of return offered by an investment. The time element refers to period of waiting required to reap the return. Accordingly early investment decision has three key aspects. [...]
[...] While the risk of a security is nothing but the likelihood of the return turning out to be more or less than the expected, the total risk of an asset may be perceived as being the sum of several different contributing risk factors like interest rate fluctuations, market cyclical, purchasing power instability and so on. As mentioned Donald E. Fisher and Ronald J. Joeden Beta Coefficient Beta measures non-diversifiable risk. It shows how the price of a security response to market forces. It is calculated by relating the returns on the security with returns for the market. [...]
[...] Almost all the cases, the hard fact is that return and risk are inseparable. Further the maximum higher the return the grater t6he risk. Therefore the ultimate decisions to be made in the investment are two. What securities to be held How many rupees should be allocated to each. These decisions are made in three steps Security analysis 2. Security evaluation 3. Portfolio analysis, selections and management. Securities are marketable financial instruments that bestow on their owners the right to make specific claims on particular assets. [...]
[...] Basically modern security analysis deeply rooted in the fundamental concept. But the more modern approach to common stock analysis emphasizes risks and return estimate rather than mere price and dividend estimates, of course dependent on share price and accompanying the dividend stream. Security Evaluation It refers to the act of assessing the true worth of security. Before committing the fund on stock exchange securities, the investor should make thorough comparison of the prices of the security with its true value. [...]
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