1 stock portfolio project

Portfolio Management

The art and science of making decisions about investment mix and policy,
matching investments to objectives, asset allocation for individuals and institutions, and
balancing risk against Performance.

Portfolio management is all about strengths, weaknesses, opportunities and threats

in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and many
other tradeoffs encountered in the attempt to maximize return at a given appetite for risk.

There are two forms of portfolio management: Passive and Active. Passive
management simply tracks a market index, commonly referred to as indexing or index
investing. Active management involves a single manager, co-managers, or a team of
managers who attempt to beat the market return by actively managing a fund's portfolio
through investment decisions based on research and decisions on individual holdings.
Closed-end funds are generally actively managed.

Stock portfolio

Stock portfolio may be described as a list of stocks in which investment has been
made. It needs some experience and research work to build a proper stock portfolio. To
create an appropriate stock portfolio, one needs to define his or her financial goals first.
At the same time, the risk tolerance factor is also very important and should be
considered with due importance. On the other hand, the initial investments are also a key
figure behind creating a good stock portfolio.

In any type of portfolio, diversification is an important factor. If there is enough

diversity in the portfolio, the investor can remain secured even in the most hostile
markets. At the same time, the diversified stock portfolio can help the investor to
experience steady growth in the investments. To diversify the stock portfolio, one must
do a bit of research and identify the stocks, which come with maximum potentialities.
The investors should also try to invest in stocks from different industries and sectors.

According to the experts, one should try to maintain at least 10-15 different stocks
in the stock portfolio. This kind of portfolio may cost high. But there are a few stock-
brokers who offer low cost plans for creating multi-stock portfolio.

According to the risk tolerance factor and the financial objectives, the investors
select from the following categories of stock investment to build their investment
portfolio. The categories are:
• Capital Appreciation: The investors who are only concerned with the rapid
growth of the capital generally select this type of portfolio. The risk factor
involved in this category is very high.
• Balance of capital appreciation and preservation: Here the investors are concerned
with maintaining a proper balance between the growth and the risk. They are not
frightened to take risk but the risks are very calculative here.

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• Capital Preservation: The investors here are primarily concerned with the security
of the investment and generally they are not ready to take any kind of risk.

Once the stock portfolio is created, it should be monitored properly because the
market trend changes very rapidly. There are several types of stocks, which make a stock
portfolio and depending on these, the monitoring process should be designed. If the
portfolio consists of high risk stocks, it should be checked daily and if the stocks are of
medium risk, the portfolio can be monitored once a week. On the other hand, there are
several stocks, which provide low growth rate but involve reasonably low risk. The stock
portfolios consisting of such stocks only need occasional monitoring.

Stock broker

Stock broker is the third party that is involved in selling and buying of shares.
Stock broker charge commission for their services and it’s differ according to stock
brokers services. It is necessary for an investor for stock purchases and selling to have a
stock broker account.
For the purpose of daily transactions of project we selected Taurus Securities
Private Limited.

Taurus Securities Private Limited

Company mission

Our purpose is to provide a full range of capital market related products and
services to individual and institutional clients. We aim to achieve this goal by setting
industry standards for integrity, personalized service, efficiency and innovation.
At Taurus we put our belief in quality into practice: we are one of the few
Pakistani equity broking firms to have obtained an internationally recognized ISO
9001:2000 certification, an international standard for quality management systems.

Company information

Taurus Securities Limited (TSL) is an unlisted public limited company in

operation since January, 1994. We are a subsidiary of the National Bank of Pakistan,
Pakistan's largest Commercial Bank, owned by the Government of Pakistan. Our other
shareholders include the Bank of Khyber and the Saudi-Pak Industrial and Agricultural
Investment Company (Pvt.) Ltd.
Taurus Securities Limited is registered with the Securities and Exchange
Commission of Pakistan to provide securities brokerage services. TSL is a licensed
member of the Karachi Stock Exchange (KSE).

Our activities encompass the following areas:

• Equity brokerage
• Financial and economic research
• Corporate finance and advisory

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In terms of market share, Taurus is ranked high in the top tier of Pakistan equity
brokers. We have our Corporate Headquarters at Karachi, and a branch office in
Peshawar, through which we provide our clients with trading access to the KSE.

Why Taurus?

The first step towards investing in the stock market is finding the right
stockbroker. Choosing the right broker is often the difference between investing success
and failure. To justify his or her commission, your broker must help you profit from
opportunities while guarding against market risks. Therefore, while choosing your
broker, we recommend that you look for the following qualities:

In-depth research

Market timing

Volatile emerging stock markets are often driven by a herd instinct, with investors
stampeding in or out at the same time. Quality research provides investors the ability to
anticipate market trends well in advance, and thus stay ahead of the herd. Your broker
should have a record of successfully forecasting such trends. Macro economic
forecasting, technical analysis capability and early market intelligence are essential
requirements.

Stock selection

Along with market timing, stock selection is a key part of the investment process.
A broker must be able to locate hidden stock values for clients that the rest of the market
has overlooked. This is achieved through incisive, original fundamental analysis of
individual sectors and companies. Select a broker with a top quality research team
covering all major sectors and stocks.

Quality research underpins all of Taurus' principal activities.

Timely research publications

We regularly update our clients on macroeconomic, stock market and sector

trends through our daily briefings and other periodical research publications. Clients are
also provided with timely recommendations on individual stock prospects. Our research
advice is based on a continuous and detailed evaluation of economic indicators, industry
and company specific information. In addition, we extensively use technical analysis to
enable our investors to benefit from possible short-term price movement in stock prices.
Our research advice is available to all our clients free of cost.

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Technology and information systems

Apart from a core team of in-house professionals, our research facility includes an
online financial and economic database, a comprehensive stock of books, journals,
reports and statistical publications and now, most recently, a web site offering a host of
financial services.

Consultancy services

Taurus also provides research and consultancy services in areas such as finance,
industry, trade, macro and micro economic policies.

Efficient execution

Once your order has been placed, you would wish to ensure that your broker
executes it efficiently. By that we mean buying or selling the quantity you want at the
best possible price. Efficient execution requires a combination of sharp dealing skills,
market intelligence and a large diversified client network. The last is a key quality to look
for in a broker: a widespread client network allows a broker to quickly cross match client
orders in illiquid stocks.

Large client base

Taurus' brokerage services cater to local and foreign institutional clients such as
mutual funds, unit trusts, investment banks, insurance companies, brokerage firms, and
selected individuals. We have established ourselves as a premier brokerage house in the
Pakistan market on the strength of swift and transparent execution capabilities and an
unrivalled ability to match large and difficult cross trades.

Integrity

Brokers are often faced with conflicts of interest between their own trading
positions and their clients' orders. Thus trading integrity is vital if you are to receive the
best possible prices from your broker. Choose a broker with a market reputation for
integrity.

Client confidence is our key concern

At Taurus we recognize that client confidence is the foundation of our business.

We apply rigorous internal procedures to avoid potential conflicts of interest, and ensure
that our actions are always underlined by transparency.

Adequate capital backing

`Brokers often deal with clients on a delivery versus payment basis. This means
that if you buy (sell) shares you will make a payment (deliver shares) first and receive

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shares (payment) later. You are thus exposed to a settlement risk. Make sure that your
broker has an adequate capital base and shareholder backing to protect you against
settlement risks.
In addition to our equity capital, we have the backing of the substantial financial
resources of our sponsoring institutions.

Quality of human resources:

The success of a financial services company rests on the quality of its people. To
deliver the quality of service that you as a client are entitled to, a broker must employ the
best human resources available.
The people at Taurus are a team of experienced, dedicated professionals, with a
commitment to excel at what they do, whether it is sales, dealing, settlements, custody or
research. They recognize that theirs is a service industry, where technical excellence
alone is not enough. Each one of us at Taurus, therefore, works at building long-term
relationships, based on winning the trust, confidence and loyalty of our clients.
At Taurus you will be cared for by a team of experienced, dedicated
professionals, with a commitment to excel at what we do. We recognize that ours is a
service industry, where technical excellence alone is not enough. Each one of us at
Taurus, therefore, works at building long-term relationships, based on winning the trust,
confidence and loyalty or our clients.

Accounts:

You can keep round the clock track of your equity investments through us with our
comprehensive online account statements. These statements, always just a click away, are
available to all our trading clients, both online and offline. To access them you only need
your user ID and password.
We provide real-time client account data. However, the stock quotes used to value
market positions may be delayed by up to 20 minutes. Whenever you wish you can view
the following standard set of statements:

• Account Balance

This statement provides your current account value and contains the following
information:

o Available cash balance

o Proceeds/(cost) of current transaction(s)
o Portfolio value at market prices

• Account Portfolio

Your total current stock holdings with Taurus including:

o Stock name

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o Total quantity
o Current market price
o Current value

• Account Positions

Your long trading positions and performance including:

o Stock name
o Total quantity
o Cost price
o Current market price
o Unrealized gain/(loss) at current market price

• Account History

A complete statement of account that records all the cash movements

through your account as of the statement date: inflows from cash deposits, stock
sales, cash dividends; payments for stock purchases and cash withdrawals.

• Transaction History

This report lists the details of all your trades over the report period broken
down by purchases and sales.

All the above reports can be viewed online, and downloaded/printed for
your soft/hard copy records. In addition to the above, you can always contact us
for further account details and history whenever you wish.

My Stock portfolio:

We have one million of investment and we want to make a portfolio house. Our stock
portfolio is highly diversified and its consist on four different industries including

 Oil and gas 50%

 Automobile and parts 15%
 Banks 15%
 Telecommunication 20%

We select the diversified portfolio because at the beginning we want to minimize the risk,
that why 50% of the investment in oil and gas sector specially in OGDC (Oil and Gas
Development Corporation) because the share prices of OGDC is stable and normally its
shows positive trend in trading.

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We started our portfolio on 1st June 2010, we have one million of investment and
according to our portfolio weights we buy shares

50% of 1 Million
Shares of OGDC = -----------------------
Market value of OGDC share

500,000
=----------------------------
131.42

= 3,805

Our 15% investment of portfolio in automobile sector and we purchase shares of

Indus motors company, numbers of share buy from original investment are:

15% of 1 Million
Shares of Indus motor =-------------------------------------------
Share price of Indus Motors Co.

150,000
=-------------------------------------------
256.15

= 586

To reduce risk of portfolio we invested 15% of 1 Million in banking sectors and

select Bank Al Falah on the basis of good reputation.

15% of 1 Million
Shares of Bank AL Falah =----------------------------------------
Share price of Bank Al Falah

150,000
=-----------------------------------
8.93

= 16,797

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We also invested remaining 20% of investment in telecommunication sector and

invested in PTCL shares. Numbers of shares bought at the time of initial investment are:

20% of 1 Million
Shares of PTCL =-------------------------------
Share price of PTCL

200,000
=----------------------------------
19.55

= 10,230

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Results of portfolio:

We invested one Million of investment in four different stocks. We calculate the

results of stock portfolio at July 1st, 2010 and found such results;

Total Value of Portfolio at July 1st, 2010 = 1037, 670

Total Value of Investment at June 1st, 2010 = (1000, 000)

Net Profit Earned From Stock Portfolio = 37670

Our portfolio earns Rupees 37,670 of net profit as a whole. Now we will calculate
separately net profit earn by every stock.

OGDC:

Value of OGDC shares at July 1st, 2010 = 610, 880

Value of investment in OGDC at June 1st, 2010 = (500, 000)
Net profit = 110, 000

Indus Motor Co:

Value of Indus Motor Co shares at July 1st, 2010 = 236, 300
Value of investment in Indus Motor Co at June 1st, 2010 = (150,000)
Net profit = 86, 000

Bank Al-Falah:
Value of Bank Al-Falah shares at July 1st, 2010 = 53, 074
Value of investment in Bank Al-Falah at June 1st, 2010 = (150, 000)
Net Loss = (96,926)

PTCL:
Value of PTCL shares at July 1st, 2010 = 137, 951
Value of investment in PTCL at June 1st, 2010 = (200, 000)
Net Loss = (62, 049)

University Of Wah. Prepared By: Muhammad Nisar Khan

10 stock portfolio project

Rebalancing Of Portfolio:

Effective portfolio management involves

• Monitoring the portfolio and the investment environment for changes in return
and risk expectations
• Evaluating changes in investor circumstances

Significant changes may necessitate altering the portfolio’s investment. We are going to
rebalance our portfolio at July 1st, 2010 according to our investment policy, given below;

 Oil and gas 50%

 Automobile and parts 15%
 Banks 15%
 Telecommunication 20%

Current Rebalanci Withdrawal

Investment ng or Invested
Amount
OGDC 610,880 518,835 Withdrawal
-92,045
Indus Motor Co 236,300 155,650 Withdrawal
-80,650
Bank Al-Falah 53,074 155,650 Invested
102,576
PTCL 137,951 207,534 Invested
69,583

Total value of portfolio 1037, 670

When we are going to rebalance our portfolio we have to withdrawal money from
OGDC and Indus Motor Co and have to invest in Bank Al Falah and PTCL shares
according to pattern given above.

University Of Wah. Prepared By: Muhammad Nisar Khan