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Portfolio Revision Strategies 👨‍💻🛤️

How do you decide when to click the "sell" button during revision? Professionals use Formula Plans to remove emotion from the decision and stick to a disciplined strategy.

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1. Constant Rupee Value Plan

In this strategy, the investor wants to keep a fixed amount of money in stocks (e.g., exactly ₹1,00,000).

  • If stock prices go up: You sell the excess and put it into bonds.
  • If stock prices go down: You take money from bonds to buy more stocks.
  • Result: You are forced to "Sell High" and "Buy Low."

2. Constant Proportion Plan (Rebalancing)

This is the most popular strategy for individual investors. You keep a fixed percentage in stocks (e.g., 60% Stocks, 40% Bonds).

  • Whenever the market moves significantly (e.g., stocks become 65% of the total), you sell stocks and buy bonds to get back to 60/40.

3. Variable Proportion Plan

This is a more aggressive strategy.

  • When the market is "Cheap" (Low P/E ratios), you increase the stock proportion (e.g., move to 80% stocks).
  • When the market is "Expensive" (High P/E ratios), you decrease the stock proportion (e.g., move to 30% stocks).

4. Selection of Stocks (Active Strategy)

Instead of just rebalancing, some investors use revision to change the quality of the portfolio:

  • Replacing a stock whose earnings are falling with a stock whose earnings are rising.
  • Moving from one sector (like Banking) to another (like Pharma) based on economic trends.
Important

Regardless of the strategy, the goal is always the same: Maintain the desired risk-return profile while minimizing turnover costs.

Summary (Course Conclusion) 🎓✈️

Congratulations! You have completed the Portfolio Management course. We have traveled from the basics of returns and risk to the complex world of the Markowitz Efficient Frontier, CAPM pricing, and final Portfolio Revision.

Remember the Golden Rules:

  1. Risk and Return are linked—never chase high return without understanding the risk.
  2. Diversification is the only "free lunch" in finance.
  3. The Goal is not just to have the most money, but to have an Efficient and Optimal portfolio that fits YOUR life.

Final Quiz! 🎯

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