What Is Stock Portfolio Evaluation?

By Author: VVK Prasad Vivekam
Total Articles: 17
Comment this article

What is Stock Portfolio Evaluation?

Evaluation of stocks is often a tricky issue not many investors are comfortable with. They try to gather information from several sites which often provide conflicting views on the same stock at the same time. Views from these analysts come without any responsibility on their shoulders. They are not directly rewarded by the people seeking to benefit out of their views making the whole process of advisory loosely structured and ill equipped to address the needs of investors.

Portfolio Management services option:
Portfolio management seeks to take the custody of one's assets and then begin to manage. Here too, investors cannot question the actions of portfolio manager unless enough evidence is available to prove the mala fide intentions. In the absence of any proof to the contrary, actions of portfolio managers and their consequences will have to be borne by the investors. Further, small retail clients have no access to this service since the minimum size of portfolio is set at Rs 25 lac. Parting with the custody of one's hard earned money also is working against the spread ...
... of portfolio management service. Unproven antecedents of portfolio managers put off many investors from even entertaining them.

Mutual funds option:
With doors closed for portfolio management for retail investors, they often land themselves up in mutual funds. Here money is pooled from all such investors and is expected to be invested wisely. The pooled funds are invested and managed by fund manager and he is accountable to fund house which floated the scheme than to the investors, whose money he handles. Here again, with no direct accountability to original investors, the objectives of retail investors may not be in sync with fund managers approach. Further, most funds fail to match even the returns in Index raising doubts on the very premise on which mutual fund investments are made. Investors in many cases would have done better by picking up index funds, which mimic the behavior of underlying indices.
Interest in equities is on the wane because of the above factors. Retail investors have nowhere to go for advice or for evaluation of their existing portfolios. Vast majority of investors crave for a service that will help them do a proper Stock Portfolio Evaluation.

So, what is Stock Portfolio Evaluation?

Portfolio evaluation is an exercise by which investors seek to take a view on each of his stocks and also the collective behavior of their stocks together. It is often said that any portfolio of 10 randomly selected stocks follows the behavior of Index closely. When the selection of stocks is not random and is based on subjective or objective criteria, it may have more or less volatility than index, based on stocks included in portfolio.
 
Given a chance, everyone investor would like to know
1. The price range in which each stock in the portfolio could be moving in coming days. Investors would also like to know the impact of any news on the stocks they own.
2. The earnings of each and every company in their portfolio adjusted to the news about expected price behavior.
3. The collective earnings of all our stocks or portfolio earnings. If there is a way to know the trend of portfolio earnings for the past few quarters, it could possibly help us see an emerging trend.
4. The relative positioning of our portfolio vis-a-vis Index. When we know the portfolio earnings and portfolio value, we can calculate Portfolio Price Earnings (PE) ratio for comparison with Index.
5. The weak and strong stocks in a portfolio when compared to Index as our aim are to earn returns that are superior to index.
6. The target prices for stocks to unload, so that we can optimize the returns on our investment.
Vivekam’s unique tool “Portfolio Scanner” satisfies all the above requirements. Vivekam has irrefutable evidence to suggest that the vast majority of stocks follow price ranges that could be determined from the announced working results. Determination of fair values and likely price ranges is built into the systems designed by Vivekam. In “Portfolio Scanner”, Vivekam gives you reports that show the earnings of each stock in your portfolio for the past 5 quarters on Trailing Twelve Months (TTM) basis. Further, it also provides the scope to grow for all your stocks from current level.

Total earnings of your portfolio and your portfolio’s PE ratio are computed for you as well. Portfolio Scanner also compares your portfolio PE ratio with Index PE ratio to let you know how your portfolio is placed.

Vivekam's reports also compare fundamentals of all your stocks, one by one, with Index on the current day and mark them as "WEAK" or "STRONG" in comparison with Index. Apart from marking WEAK and STRONG stocks in your portfolio, Vivekam also gives you target prices for stocks. Target prices indicate the levels at which you should be selling them based on information in public domain up till that date. STRONG stocks are suggested for sale at 97% of highest expected price and WEAK ones are suggested at 97% of their fair value. Vivekam helps you not sell WEAK stocks in distress and not continue holding STRONG shares beyond their maximum expected price.

Vivekam's financial advisory evaluation services include a service called PRICE, which lets you know how much more you could have made in last 3 years, had you followed Vivekam's time tested scientific evaluation strategies of stocks. Vivekam's services are meant to be useful as stocks investment management services for even a novice and will empower him to compete with most accomplished investors.

Enjoy investing using the innovative tools offered by Vivekam.

Happy investing, 
V.V.K Prasad
CMD, Vivekam Financial Services.