Stock Portfolio Returns – A Discussion of Their True Determinants
Before going deep into the discussion we should first understand what a stock portfolio actually means in its true sense. In a brief way we can term it as a collection. It is a compilation of various financial assets comprising of some investment tools. These investment tools may be gold, real estate certificates, stocks, asset-backed securities, bank deposits, bonds, foreign exchanges etc. held by an individual or a group of individuals. So, we will discuss about Stock Portfolio Returns – A Discussion of Their True Determinants A stock portfolio is constructed just to minimize the related risk factor and to maximize an investor’s return as well. As the returns of assets that constitute a portfolio never move in the equal trend, the risk factor of the portfolio is always lower than the risk linked to a single asset. That is the reason why asset allocation is the prime factor behind portfolio returns in the Indian stock market. It is neither the assortment of individual stock nor any particular global market.
Formula of success
No one, even a proficient financial guru can tell the exact success formula on how to get satisfactory returns on investment. But with there wide knowledge in financial field. They know where to invest money and in what proportion so as to minimize the risk and maximize the profit. They divide the funds in such a way that no one field get maximum fund and is equally allotted in various fields.
Now the question arises is there any specific theory to follow? We have many investors around us who do not follow or believe any theory or formula. They simply follow their own intuitions where little time is invested. Surprisingly they are often seen to get even more profits in their cash. Well, there must be some factors that actually work straight or in some other way. There must be some determinants to look for that attribute to a good extent in the range of portfolio performance.
Portfolio Performance Determinants:
Well, no one can assure anybody that there are some specific determinants that are proven and time tested that actually work for the benefit of the investor. But there are some areas to focus that actually show positive results when applied with proper knowledge. Stock picking, timing, asset class allocation, choosing correct regional markets are a few of those areas of concern or we can say ‘determinants’ that make some sense in portfolio performance. Out of these factors, asset class allocation draws the maximum attention globally. Choosing a perfect asset allocation is prime important. At the same time what makes a substantial difference in the output performance is identifying a correct regional market.
In the end, what we can learn from this? In a single sentence it can be clearly said that investing at the right time, in the right companies, and in the right countries does create the significant sense.
Lessons to learn from the above discussion
There are thousands of stock market consultants roaming here and there to guide an investor. Obviously they are not going to do any social service by providing their valuable knowledge but to get their livelihood. In such a critical scenario whom can one blindly trust? Just get one person who is an excellent and clever stock picker, knows very well about global market scenarios, can understand regional market trends, and has got enough of technical indicators to precisely predict the market timing. So, you have understand the topic of Stock Portfolio Returns – A Discussion of Their True Determinants. Just think of a person or firm which can be the best one to guide you for your tremendous benefits?
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