1. Personal Portfolio Management -in a turbulent market

2. Step 1 : Get The Cash Portion of salary? Life savings? Inheritance?
Loan?
A mix of all?

3. Step 1 : Get The Cash ~16% Risk of Margin Financing
Year
Index Return (%)
Margin Interest Rate (%)
2010
82.8%
~16%
2011
-36.6%
2012
-19.7%
2013
5.2%
2014
14.0%
June, 2015
-5.8%
Margin Interest rate was higher than market return since 2010

4. Step 2 : Set The Purpose And The Target
Purpose of the portfolio
Living expenses
Provision for future event
Retirement
Target return

5. Step 3 : Investment Focus
Growth Stocks
High growth in business and profit
Future expectation is the major driver; inherently risky
Low dividend yield
Relatively higher valuation
Go well with long term purposes like retirement or provision for future event
Value Stocks
Slow growth in business and profit
Existing business and assets backed valuation
High dividend yield
Relatively lower valuation
Go well with regular cash requirement needs like maintaining living expenses

6. Step 4 : Stock Picking Fundamental Analysis Technical Analysis
Analyzing financial statements and the health of company, its management, competitive markets and risks
Making financial projections
To arrive at stock valuation
Study of charts of past price and trading action
All information is reflected already in the stock price, so fundamental analysis is a waste of time.
Trend persists. No random walk theory. Trends are your friends.
History repeats.

7. Step 4 : Stock Picking Top Down Bottom Up The chart says it all.
Fundamental Analysis
Technical Analysis
Top Down
Bottom Up
The chart says it all.
Price + Volume =
Fundamental insider info scam + greed fear ++
Economy
Industry
Stock

8. Step 4 : Stock Picking Fundamental Analysis Technical Analysis
Make money out of your stake in companies and how their products or services sell
Make money out of movement from the market, with each movement often measured in pennies

9. Step 4 : Stock Picking Fundamental Analysis Technical Analysis
How traders see investors
How investors see traders

10. Step 4 : Stock Picking Fundamental Analysis Technical Analysis
Grow rich slowly. It can actually be
quicker than you think. Buy and hold.
Get rich quickly scheme. Market timing rules your methods.

11. “Fundamental Never Goes Wrong”
Step 4 : Stock Picking
“Fundamental Never Goes Wrong”

12. Step 4 : Stock Picking

13. BDT 1 lac invested in 2007 in one of the stocks or in index
Step 4 : Stock Picking
Portfolio Value* in 2015
Stock
Present Value*(BDT)
BATBC
6,686,569
BATASHOE
1,996,398
GLAXOSMITH
1,820,197
RENATA
1,844,394
BERGERPBL
1,409,687
SQURPHARMA
1,203,338
Index (Jan, Jun, 2015)
275,002
*with re-investment assumption
BDT 1 lac invested in 2007 in one of the stocks or in index

14. Step 4 : Stock Picking
"We want businesses to be one (a) that we can understand (b) with favorable long-term prospects (c) operated by honest and competent people (d) available at a very attractive price” -Warren Buffet

15. Step 4 : Stock Picking Governance Business
First thing to know “the level of corporate governance.”
Business
Then comes “What does the company do?”
Ask next “Does it have competitions? Is it doing the job better than its competitors?”
Make sure that “the company has a sustainable business demand in foreseeable future.”

16. Step 4 : Stock Picking Financials Valuation
Find out “whether the company is profitable”.
And “whether it compensates YOU”.
Valuation
If all the things are right, ask yourself “Is the company ‘cheap’, ‘fairly valued’ or ‘overvalued’?”

17. Step 5 : Understanding Valuation
In an investment ‘We pay now to get in future’.
You pay Price now to get Earnings in future.
Price/Earnings tells how much we are paying for BDT 1 of earning.

18. Step 5 : Understanding Valuation
The rules of thumb are
The higher the P/E, the more expensive the stock is.
The lower the P/E, the cheaper the stock is.
Higher growth deserves higher P/E
The P/E ratio of any company that’s fairly priced will equal to its growth rate Peter Lynch

19. Step 5 : Understanding Valuation
There are similar ratios like Price/Sales, Price/Book Value
Make sure Earnings/Sales/Book Value reflects reality.

20. Step 5 : Understanding Valuation
Trust on Financial Numbers
Trust on Financial Numbers
Tickr
P/BV
BRACBANK
2.9x
DUTCHBANGL
1.9x
IFIC
1.7x
TRUSTBANK
1.5x
MTB
DHAKABANK
1.3x
UCBL
1.2x
ISLAMIBANK
BANKASIA
1.0x
PRIMEBANK
CITYBANK
EBL
UTTARABANK
0.9x
SOUTHEASTB
0.8x
NBL
PREMIERBAN
STANDBANKL
0.7x
MERCANBANK
NCCBANK
Tickr
P/E
GREENDELT
28.7x
PRAGATIINS
18.8x
JANATAINS
14.9x
FEDERALINS
14.0x
PARAMOUNT
12.3x
ASIAINS
11.9x
RELIANCINS
10.9x
PIONEERINS
9.7x
SONARBAINS
9.1x
PRIMEINSUR
8.6x
AGRANINS
8.5x
PROVATIINS
8.4x
PEOPLESINS
7.3x
RUPALIINS
6.0x
BGIC
PHENIXINS
5.9x
STANDARINS
5.6x
CONTININS
5.5x
NORTHRNINS
4.8x

21. Step 6 : Portfolio construction
Diversification is the most powerful risk mitigator.
But, over-diversification might dilute return potential.
Under-diversification
Over-diversification

22. Step 6 : Portfolio construction
Bias - Herd behavior
Bias – Overconfidence
Overconfidence

23. Step 6 : Portfolio construction
Bias - Anchoring

24. Step 6 : Portfolio construction
Two Most Important Things to Remember
Be contrarian
Know and recognize mistakes
You want to be greedy when others are fearful. You want to be fearful when others are greedy. It's that simple Warren Buffet

25. Stock went nowhere in following 1.5 year
Step 7 : Trading Tactics
Frequency
Frequent trading increases commission and over a long horizon, powered by compounding dents portfolio.
Dollar Cost Averaging
Stock went nowhere in following 1.5 year

26. Step 7 : Trading Tactics
Stop Loss

27. The most important slide!!!
Discipline!!!

28. Happy Investing!