Define Portfolio Revision

The care taken in the construction of the portfolio should be extended to the review and revision of the portfolio. Fluctuations that occur in the equity prices cause substantial gain or loss to the investors. The investor should have competence and skill in the revision of the portfolio. Normally the average investor dislikes to sell in the bull market with the anticipation of further rise. Likewise, he is reluctant to buy in the bear market with the anticipation of further fall.

The portfolio management process needs frequent changes in the composition of stocks and bonds. In securities, the type of securities to be held should be revised according to the portfolio policy. If the policy of investor shifts from earnings to capital appreciation, the stocks should be revised accordingly. An investor can sell his shares if the price of shares reaches the historic high prices. Likewise, if the security does not fulfill the investor’s expectation regarding return and growth, it is better to get rid of it. The investor should also consider the factors like risk, quality and tax concessions. If another stock offers a competitive edge over the present stock, investment should be shifted to the other stock. Many investors find themselves inadequate in their ability to trade and earn profit. Mechanical methods are adopted to earn better profit through proper timing. Such types of mechanical methods are Formula Plans and Swaps.