In our language it sounds - do not invest all money in one papers, whatever favorable it an investment seemed to you. Only such restraint will allow to avoid catastrophic damages in case of a mistake.
The first and one of the most expensive, labor-consuming elements of management, is the monitoring representing the continuous detailed analysis of stock market, tendencies of its development, sectors of stock market, investment qualities of securities. An ultimate goal of monitoring is the choice of the securities possessing the investment properties corresponding to this type of a portfolio. Monitoring is a basis of both an active, and passive way of management.
The big block of problems is connected with process of mathematical modeling and management of portfolios of securities. The portfolio of financial assets is the difficult financial object having own theoretical base. Thus, when forecasting there are problems of modeling and use of mathematical apparatus, in particular, of the statistical. Of course, in some cases, when it is possible to speak not about a portfolio, and about some elements of "portfolio approach", it is possible to manage simpler receptions, but before everyone who is engaged in this perspective, there are serious settlement and research problems sooner or later. And universal approach to the solution of all arising tasks does not exist, and specifics of a concrete case demand modification of basic models.
The portfolio of aggressive growth is aimed at the maximum gain of the capital. Stocks of the young, fast-growing companies are a part of this type of a portfolio. Investments into this type of a portfolio are rather risky, but at the same time they can bring in the highest income.
The investment orientation of investments in a regional section leads to creation of the portfolios created from securities of various parties; securities of the issuers who are in one region; various foreign securities.
Diversification of investments - the basic principle of portfolio investment. The idea of this principle is well shown in an ancient English saying: do not put all eggs in one basket - "do not put all eggs in one basket".
Income on portfolio investments represents gross profit on all set of the papers included in this or that portfolio taking into account risk. There is a problem of quantitative compliance between profit and risk which has to decide quickly for continuous improvement of structure of already created portfolios and formation new, according to wishes of investors. It is necessary to tell that the specified problem is among those for which decision quickly enough it is possible to find the general scheme of the decision but which are practically not solved up to the end.
Any of investment values does not possess all listed above properties. Therefore the compromise is inevitable. If the security is reliable, profitability will be low as those who prefer reliability, will offer high price and will bring down profitability. The main goal when forming a portfolio consists in achievement of the most optimum combination between risk and the income for the investor. In other words, the corresponding set of investment tools is urged to reduce risk of the investor to a minimum and at the same time to increase its income to a maximum.
Also such way of passive management as a method of index fund is hardly applicable. The index fund — is the portfolio reflecting the movement of the chosen market index characterizing a condition of all securities market. If the investor wishes that the portfolio reflected a condition of the market, it has to have such share of securities what these papers make at calculation of an index in a portfolio. In general the securities market is ineffective now therefore application of such method can yield losses instead of desirable positive result.
The following block of problems is connected already directly with the solution of optimizing tasks. It is necessary to decide on the main criterion of optimization in procedure of formation of a portfolio. As a rule, as criterion functions (criteria can act only profitability and risk (or some types of risk, and all other parameters are used in the form of restrictions.
The main objective of portfolio investment — to improve investment conditions, having given sets of securities such investment characteristics which are unattainable from a position of separately taken security, and are possible only at their combination.