Rather than take my exam for me, why don’t I try to take it for him? Wouldn’t it be great if someone had really learned it all along and not to mention applied the concepts? It is a basic theory of risk and portfolio management and its application in real life. I realized this after reading an article on applied portfolio management by Robert Kaplan and his co-workers.
They explained that there are two key aspects of effective portfolio management; risk and portfolio security. If you take my exam for me, it means that I will have to work on these two aspects too. This implies that the portfolio manager must also have an MBA and be very knowledgeable in finance and business. And not just a little bit of knowledge but deep knowledge. There is much theory involved too.
Now then, why did I need a portfolio management plan anyway? Why can’t I just keep track of what is happening as it happens in the market? Isn’t that what I am doing already? Yes, and no. To get into the business of financial risk and to do the basic analysis, I needed to take my exam for me and my advisor provided that assistance.
However, once inside the firm, I still had to find some way to manage my portfolio. This meant that I either had to do it myself or hire someone to do it for me. Now, if I had hired a portfolio manager, I would have been putting myself at greater risk of selecting the wrong investment opportunities and that could be bad for me and my portfolio. Of course, hiring a portfolio manager also cost money so I would have to weigh the costs versus the benefit.
This is where my applied portfolio management plan came into play. Instead of having to learn how to do all the analysis and invest for my own portfolio, I would only have to remember what the advisor told me to buy and sell and how to do it. I also didn’t have to worry about learning about portfolio management theories or how to interpret financial statements. The advisor was the one doing the “dirty work” while I spent my time doing the “cool stuff.”
Of course, I didn’t just go out and hire a portfolio management plan. I actually researched various companies and their products before I made my decision. Also, I read about various strategies from books, eBooks and websites. With a little bit of studying and research under my belt, I was ready to take my test the first day it offered free online.
So now you know what kind of portfolio management plans are out there. You know which companies use these plans and which companies don’t. You know whether or not you should hire a professional or if you should just try to do it yourself. Now it’s time to take action and get started! Good luck!