In praise my daily review of financial news, I came across this interesting article in CNN Money (follow the link to read it in its version English), which commented on some low-priced shares can improve the investment portfolios of all concerned.
interesting thing for me to some of the recommendations lies in what the author says in the first paragraph "There is no perfect portfolio." The reasons the author gives to support this assertion are, first, that he is aware of the value an investor or better value-oriented and, secondly, that an investor does not always have space in the portfolio or money, to exploit a market opportunity that is more attractive.
There is no perfect portfolio: this term is debatable, since it depends on the investor profile, ie whether it is willing to assume risk or if you play short or long term, but the perfect expression may be too academic, I dare say that if there an appropriate portfolio for the investor profile.
In this case the author buy their shares based on the value they have, which means cheap to sell high, which leads me to believe that their strategy is short-term investment. For such investors, it is very difficult to find appropriate portfolio as the short term is constantly changing and there is no time to wait.
The investor does not always have enough space or money to get a break: as before this expression will depend largely on what is proposed as investor horizon and investment purposes. If you want to safeguard their money for retirement, your portfolio should move very slowly as the securities that comprise only change if you look at threats in the short term.
On the other hand, if the investor seeks specific performance then your portfolio if you must move quickly to try to minimize the effects that the market may have on performance. An example of this, would be to reduce interest rates or tax increases.
With regard to asset prices, here there may be an important reason for investor concern, as the most appropriate assets to the investor may not be the most accessible in terms of money, however, analysis of profile investor should correct this.
For example, the you only have $ 5,000 to invest and your profile is very conservative, is a natural portfolio of bonds, but their price generally fluctuates between 700 and 1,300 dollars, so you could only buy between 4 and 6 bonds the amount available. Obviously, you should go with that amount to other instruments such as Exchage Traded Funds (ETF) or other investment derivatives allowing it to diversify its portfolio.
not matter if the portfolio is perfect or not is simply whether the investor needs and opportunities are clearly identified and therefore well served.
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