Financial Markets and Institutions
Looking at John's portfolio it is clear that he has decided to invest in many different types of company, that range from Banking to Information Technology. This spreads the risk factor and means that john has a much better chance of not making a big loss as his investments are widely spread. Obviously John's main investment objective is to get the biggest return on his investments. Looking at his investments John has invested more in the companies which he views to have less risk of a loss, such as Prudential and HSBC. John has a very aggressive portfolio as it is weighted to common stocks that provide capital growth. It is very unbalanced as there are no bonds or money market. Looking at his portfolio I think John should rebalance his investments to try and spread the risk.
John has spread his risk factor by investing different amounts in five different sectors. He has cleverly bought more shares in the less risky sectors such as life assurance to give him a better chance of increasing his investment and not losing money. John's sectoral risk profile shows good judgement as the small investment in pharmaceuticals is a safe choice as this sector is very unreliable for investors. The high investment in transport is a good move because the industry is now booming and so the industry is seen as low risk, at the moment. The other three sectors are fairly stable and so are good choices for investment.
John's industrial risks are also well spread. He has invested in the financial industry the most, as it is the least risky with such companies as Barclays and Prudential. Another industry that he has invested heavily in is services which incorporates a company like British Airways. This is slightly more risky as ...