INVESTMENT ANALYSIS AND PORTFOLIO STRATEGY
CHAPTER ONE
1.0 INTRODUCTION
This study would discuss the basics of Investment Analysis and Portfolio Strategy using Wema Bank Plc as a case. Investment represents the incremental cash outlay required to install a machine, build a plant or whatever the capital investment involves for example, the cash outlay for a new machine to reduce labour costs would involve the purchase price of the equipment, the freight in and the cost of installation and start-up. On the other hand, a portfolio describes the collection of different investments that make up an investor’s total of investments.
A portfolio might refer to either:
The investment in stocks and shares by an investor, or the investments in capital projects by a company. In this era of sophisticated business environment there is need for proper monitoring of investments. Doing proper analysis of the investment, more so, for good investment evaluation from time to time the portfolio needs to be given attention, can do this.
In other words, an investor must be interested in the correlation situation of the investments, which, is how strong is the relationship between the variable.
That is, the returns of the investments on hand. For instance, a case of two investments on hand, considering correlation here, refers to a measurement of how strong the connecting is between the two variables. It must have high positive correlation, which means that both investments tends to show increase (or decrease) as opined by Aminu Nurudeen (2000), in returns at the same time.
As a result of the sophisticated business environment we operates in, it is highly necessary that portfolio strategy should be given good consideration. This goes a long way to complement investment analysis. For investment to really make a worth, or to meet the target set by the investor, there would be need for portfolio diversification. The investors need to strategize as the situation in the business environment presents itself.
