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INTRODUCTION
From The Rational Edge: The first in a new series of articles onportfolio management, this introduction expresses IBM’s viewpointabout the foundations and essentials of portfolio management, anddiscusses ideas and assets that support and enable effective portfoliomanagement practices.A good way to begin understanding what portfolio management is(and is not) may be to define the term portfolio. In a business context,we can look to the mutual fund industry to explain the term's origins.Morgan Stanley's Dictionary of Financial Terms offers the followingexplanation:If you own more than one security, you have an investment portfolio.You build the portfolio by buying additional stocks, bonds, mutualfunds, or other investments. Your goal is to increase the portfolio'svalue by selecting investments that you believe will go up in price.According to modern portfolio theory, you can reduce your investmentrisk by creating a diversified portfolio that includes enough differenttypes, or classes, of securities so that at least some of them mayproduce strong returns in any economic climate.
 
 
Note that this explanation contains a number of important ideas:
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A portfolio contains many investment vehicles.
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Owning a portfolio involves making choices -- that is, decidingwhat additional stocks, bonds, or other financial instruments tobuy; when to buy; what and when to sell; and so forth. Makingsuch decisions is a form of management.
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The management of a portfolio is goal-driven. For aninvestment portfolio, the specific goal is to increase the value.
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Managing a portfolio involves inherent risks.Over time, other industry sectors have adapted and applied theseideas to other types of "investments," including the following:
Application portfolio management
: This refers to the practice of managing an entire group or major subset of software applicationswithin a portfolio. Organizations regard these applications asinvestments because they require development (or acquisition) costsand incur continuing maintenance costs. Also, organizations mustconstantly make financial decisions about new and existing softwareapplications, including whether to invest in modifying them, whether to buy additional applications, and when to "sell" -- that is, retire -- anobsolete software application.
 
 
Product portfolio management
: Businesses group major productsthat they develop and sell into (logical) portfolios, organized by major line-of-business or business segment. Such portfolios requireongoing management decisions about what new products to develop(to diversify investments and investment risk) and what existingproducts to transform or retire (i.e., spin off or divest). Project or initiative portfolio management, an initiative, in the simplest sense, isa body of work with:
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A specific (and limited) collection of needed results or workproducts.
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A group of people who are responsible for executing theinitiative and use resources, such as funding.
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A defined beginning and end.Managers can group a number of initiatives into a portfolio thatsupports a business segment, product, or product line. These effortsare goal-driven; that is, they support major goals and/or componentsof the enterprise's business strategy. Managers must continuallychoose among competing initiatives (i.e., manage the organization'sinvestments), selecting those that best support and enable diversebusiness goals (i.e., they diversify investment risk). They must alsomanage their investments by providing continuing oversight anddecision-making about which initiatives to undertake, which tocontinue, and which to reject or discontinue.
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rasi1719

it's very nice dude,,,,,,,,,,,,,,

reply04 / 27 / 2011
08 / 03 / 2010This doucment made it onto the Rising List!
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