Vertybinių popierių portfelio formavimas finansinių krizių laikotarpiu ; Portfolio formation during the period of financial crisis

Abstract

Cyclical economical growth is natural and unavoidable phenomenon, at the same time the less amplitudes of economical cycles fluctuations are, the more attractive economy of a country is. Countries sustain ultimate difficulties when financial crises happen in a certain country. Latterly such crises mostly come into play as the prices bubble burst. The current financial crisis started from the crisis of secondary dwelling credits in the USA. After prices bubble burst it has spread worldwide and unavoidably claimed following victims: crashed two most famous underwriting banks of the world Lehman Brothers and Merrill Lynch, two biggest mortgage banks of the USA Fannie Mae and Freddie Mac, substantially fell down all stock indexes. It is evident that the world realizes the extent of this problem and probable results because similar crises had place during XX century. They impacted on economical and political regional course of that time rather strongly. But modern economies of various countries are involved in more noticeable degree, so forthcoming consequences of this crisis will be rather heavier. It is interesting how in such circumstances banks and other financial institutions manage their assets in financial markets. Also the question is whether an object of the better property diversification wouldn't become the ground for a financial markets fall. Research object – stock market during financial crisis period. Purpose of this study is to explore and summarize theoretical nonfiction and design an investment portfolio hedged from cyclic economic fluctuations. Exposition of financial bubble theories, their significance for economics, mean reason, different interpretation of bubbles analysis, stable market sector identification, and portfolio formation helps to gain the purpose. In the first part nonfiction is analyzed seeking to find leading financial bubble theories. In reference to these theories, mean reason and consequence is outline here. This part also identifies basic government tools, which can help to reduce outcomes and prevent from financial crisis in future. In the second part investment criteria is brought to light, which is necessary for portfolio formation. Techniques for portfolio formation are analyzed. In the third part market sectors is analyzed with an aim to identify those who suffers least from cyclical economical fluctuations. Analysis has shown, that least impact from financial crisis was in sectors based on daily consumtion needs: consumer staples, health care and utilities stock market sectors. From these identified sectors portfolio has been constructed, which risk and return estimation compared with primary stock market indices of America, Eupope an Asia was much better. Otherwise gold as an alternative investment was better.