1) On Portfolio Management for Strategic Growth by Tom Adams

Jeff Lund
Kerr-McGee Oil and Gas Corp.Houston, Texas, USAJack A. Albers Burlington Resources
InternationalHouston, TexasMichael BackJason McVeanCalgary, Alberta, CanadaJohn I.
Howell III Portfolio Decisions, Inc.Houston, Texas

Introduction
This article talks about an efficient way of managing your portfolio through detailed analysis
of the fundamentals and growth in the company. They have analyzed petroleum companies in
this article. The petroleum industry is shifting emphasis from cost-cutting to more diverse
asset management practices. Portfolio optimization, a fast and effective way of analyzing and
improving overall asset value.
Analysis of the case
Here in this article the reviewers analyze the various major financial aspects of the company
inorder to analyze a trend in its growth and make analysis for the future trend in its monetary
value. Here they analyze all aspects from cash flows to reserves on a long term basis to make
proper analysis. The portfolio-management approach capitalizes on the fact that all projects
interact, whether they involve exploration, development, production or acquisition. Factors
such as market uctuations, performance targets and technical risk are among the elements
that tie one project to another.
Application of the concept: The portfolio-management approach is helping managers at KerrMcGee Oil & Gas Corporation test and rene strategies and communicate those strategies

within their organization. The portfolio perspective provides a critical link between strategy
and investment options for the teams that take the vision of success dened by top
management and produce results that consistently place Kerr-McGee in the top quartile
among peer companies.
Conclusion
Using techniques as sophisticated as those used here , such as detailed analysis, modeling and
simulation packages, the set of tools help reduce complex problems to manageable ones that
can be analyzed consistently and logically.

2) Optimal Portfolio Structure for Investments in the International Financial Market:

The Example of the Central Bank of Armenia Hayk Zayimtsyan Working Paper 0601
http://aea.am/files/papers/w0601.pdf

Introduction
The present research focuses on theoretical and practical issues of portfolio management,
particularly constructing an optimal investment portfolio which will best suit the specific
preferences of the investor. Central factors to be considered in the context of investor

preferences would be the latters willingness to be exposed to risk and his expectations in
terms of return from these investments.
Expected portfolio return and standard deviation are used as quantitative measurements of
investment decision making factors. At the outset of research, the Markowitzs meanvariance model is used to determine the optimal investment portfolio, utilizing time series
data on a number of financial instruments available to the Central Bank of Armenia (as the
exemplary investor) to estimate the efficient investment frontier and evaluating the investors
degree of risk aversion on the basis of previous research

Sophisticated financial markets and a well-developed financial infrastructure are an integral

part of all developed market economies worldwide. They provide the investment environment
in which those who hold excess funds (investors, which comprise a wide spectrum of
individual, corporate and governmental bodies) offer those funds to economic entities in need
of such funds. This intermediary role of the financial system is highlighted by the fact that
separate economic entities are not self sufficient in terms of fulfilling their needs in
investment resources, as well as by common practice of timing discrepancies between
financial flows among market agents. To facilitate these flows, the processes of lending and
borrowing, as well as investing in real assets, are most often intermediated by various types
of financial instruments, such as equities, debt instruments, derivatives, etc
Overall it should be admitted that this study can claim to be nothing more than a first
experimental step in applying a well-developed theoretical model to the practical investment
activities of an investor as peculiar and unique as a central bank. Among other concrete
results the above analysis implies that any single model cannot be used for practical decisionmaking in isolation from other similar models and alternative approaches.

3) Practical Risk Analysis for

Portfolio Managers and Traders Ananth Madhavan*Jian Yang

Introduction
Once a fairly esoteric subject, risk analysis and measurement has become a critical function
for both portfolio managers and traders. Yet, accurate measurement and analysis of risk
presents many practical challenges including the choice of risk model, pitfalls in portfolio
optimization, horizon mismatches, and out-of-sample testing. This article provides a detailed
overview of recent developments in risk analysis and modeling, with a focus on practical
applications for both portfolio managers and traders. We demonstrate that these tools can
provide invaluable insights regarding portfolio risk, but must be applied with considerable
care. Risk analysis, as it stands today, is as much an art as a science.

Once a fairly esoteric subject, risk analysis and measurement has become critical for both
portfolio managers and traders. In part, this phenomenon is motivated by increased concern
over risk by plan sponsors and investors, the growth of portfolio trading, heightened
volatility, and increased appreciation of quantitative tools by investment managers and
traders. Historical or subjective estimates of volatility are poor indicators of future volatility,
generating strong interest in quantitative, forward-looking models of risk.
They also compare and contrast the various types of risk models and their relative strengths
and weaknesses from a practical perspective. They then turn to our major focus, i.e., practical

issues in risk modeling. They present a series of examples to illustrate some of the practical
challenges in risk analysis. They cover the three elements of risk analysis described above
(forecasting, analysis, and evaluation) with illustrations drawn from practical experience
Thus by using quantitative methods and scientific methods the analyst can better understand
the risk of an investment and help in making proper decisions.

4) Portfolio Construction in
Global Financial Markets
Dallas Brozik and Alina M. Zapalska

Introduction
This paper presents a simulation that can be used to introduce the concepts of portfolio
management and asset allocation in the presence of global markets. While there are portfolio
management games and stock trading games that are designed, this simulation provides a
single period introduction to portfolio management. The simulation also creates an
environment in which people discover how exchange rate volatility can affect investment
returns of global funds.

Summary
This portfolio management simulation has been designed to provide the people with the
opportunity to make portfolio decisions in the context of a dynamic global nancial market.

They create three different portfolios whose returns are determined for each period by a roll
of the dice. The randomness introduced by the dice simulates real world market conditions
and eliminates the possibility of any player being able to predict the direction of the
simulation.
The simulation focuses on asset allocation and provides the players with several asset classes
to choose from for the various portfolios. By keeping the focus tight and providing all
necessary information, it is possible to simulate four different portfolio decision periods in a
single class period. This allows the students to experience the results of their decisions
immediately, to change their portfolios in response to market conditions, and to see the
effects of those changes. The players also learn how the volatility of foreign exchange rates
can affect the returns of the investments from outside the home country.

5) Crestmont ResearchPortfolio Mismanagement Asset Class Concentration Risks

Introduction
Many investors believe that a portfolio constructed with numerous stocks and bonds is
diversified. But they dont know that it needs to be properly structured by a fundamentalist.
They need to make a proper analysis on those asset classes.

Diversification in a portfolio applies to risks, not securities. Lets relate these principles first
to stocks and then to bonds. A diversified portfolio of stocks tends to provide the returns of

the general stock market. Once individual company risk is diversified, the pure stock market
risk remains.
Thus, the portfolio moves with the stock market. Stock market returns are driven by earnings
growth and valuation changes (as measured by the price/earnings ratio, known as P/E). If
P/Es increase, stock market returns are generally high since the P/E ratiomultiplies the effect
of rising earnings. If P/E ratios decrease, stock market returns will be low or negative since
declining P/Es generally offset the benefit of rising earnings.
Similar principles apply to bonds. Once the individual company risks are diversified, the
portfolio moves in concert with the bond market. The bond market is largely driven by trends
in interest rates. As many investors have experienced, when interest rates decline, bond
values increase. Likewise, rising interest rates cause bond values to decline. Thus, if interest
rates are falling, the yield from the bond portfolio is supplemented with increases in the value
of the bonds; or, if rates are rising, the decline in bond prices offsets some of the portfolio
yield resulting in lower total returns.