Currency Wars: “Beggar Thy Neighbor” Policy
What is a Currency War ? A currency war is a situation wherein devaluation of currency by one country is retaliated by a competitive devaluation from the other country. For instance if the United States were to devalue the dollar against the Pound Sterling and if the British retaliated with their own devaluation then the […]
Understanding Cryptocurrency Forks
When a new investor enters into the cryptocurrency market, they are often confused by different quotes for what appears to be the same currency. For instance, Bitcoin and Bitcoin cash have different quoted prices and so do Ethereum and Ethereum classic. This can cause considerable confusion to the novice trader. However, with time and experience, […]
The Flipkart and Wal-Mart Alliance
Flipkart is amongst the largest unicorns in the Indian startup ecosystem. Wal-Mart is a known international retailer with revenues upwards of $400 billion. Both of these companies are formidable in their own fields. However, they are set to merge. Wal-Mart has valued Flipkart at $18 billion and is all set to complete the acquisition. This […]
Financial Modelling Heuristics
A heuristic is a technological term for what is known as a “thumb rule” in common parlance. In the previous article, we discussed the guidelines which need to be followed from a conceptual point of view. However, in this article, we will discuss heuristics more from a technical standpoint. The common points which need to […]
What is Algorithmic Trading ?
Algorithmic trading was considered to be a bookish concept developed by geeks. Less than a decade ago, mainstream traders at Wall Street laughed at the idea that they may have to compete against machines. However, they have been proven wrong. The rise of algorithmic trading is no laughing matter. In about a decade, financial markets […]
Assets with some financial value are called securities.
The analysis of various tradable financial instruments is called security analysis. Security analysis helps a financial expert or a security analyst to determine the value of assets in a portfolio.
Security analysis is a method which helps to calculate the value of various assets and also find out the effect of various market fluctuations on the value of tradable financial instruments (also called securities).
Security Analysis is broadly classified into three categories:
Fundamental Analysis refers to the evaluation of securities with the help of certain fundamental business factors such as financial statements, current interest rates as well as competitor’s products and financial market.
Financial statements are nothing but proofs or written records of various financial transactions of an investor or company.
Financial statements are used by financial experts to study and analyze the profits, liabilities, assets of an organization or an individual.
Technical analysis refers to the analysis of securities and helps the finance professionals to forecast the price trends through past price trends and market data.
Quantitative analysis refers to the analysis of securities using quantitative data.
Fundamental analysis is done with the help of financial statements, competitor’s market, market data and other relevant facts and figures whereas technical analysis is more to do with the price trends of securities.
The stream which deals with managing various securities and creating an investment objective for individuals is called portfolio management. Portfoilo management refers to the art of selecting the best investment plans for an individual concerned which guarantees maximum returns with minimum risks involved.
Portfolio management is generally done with the help of portfolio managers who after understanding the client’s requirements and his ability to undertake risks design a portfolio with a mix of financial instruments with maximum returns for a secure future.
Portfolio theory was proposed by Harry M. Markowitz of University of Chicago. According to Markowitz’s portfolio theory, portfolio managers should carefully select and combine financial products on behalf of their clients for guaranteed maximum returns with minimum risks.
Portfolio theory helps portfolio managers to calculate the amount of return as well as risk for any investment portfolio.
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