The verification of the application of the TMAI method for selecting companies for the investment portfolio during the Covid-19 pandemic

Abstract

Purpose: The aim of the conducted research is to examine the effectiveness of portfolios composed of companies classified using the taxonomic measure of investment attractiveness TMAI in the following quarters in the years 2018-2023. Design/methodology/approach: To achieve the goal, the TMAI measure was used, which allows for the assessment of the examined objects and their comparison in terms of the analyzed phenomenon. Findings: The analysis carried out allowed for the creation of rankings of companies in terms of their financial situation and the construction of portfolios based on these rankings. The TMAI measure allowed for the identification of a group of companies forming portfolio 4, which allows systematically to obtain a higher rate of return than the reference portfolio. The outbreak of the Covid-19 pandemic and the wars in Ukraine significantly influenced the rates of return of investment portfolios. In the case of the strongest restrictions related to the pandemic, portfolio 5 brought positive rates of return. The study showed that during the period under review, the highest-rated companies did not create portfolios with the highest rate of return, but limited to the first 3 quarters of the pandemic, these portfolios achieved the highest rates of return. Research limitations/implications: The financial condition of a company, estimated using the TMAI measure, is a variable that is not directly measurable. Its value is generated by observations of diagnostic variables that are directly measurable. The choice of diagnostic variables is a subjective choice of the researcher and should be carried out reliably, preceded by a study of the relevant literature. Practical implications: The proposed method of assessing companies allows you to indicate a portfolio that systematically gives a better result than the reference portfolio containing all the analyzed companies. The existence of such a portfolio allows the use of TMAI for the initial selection of companies for the portfolio. Social implications: What will be the impact on society of this research? How will it influence public attitudes? How will it influence (corporate) social responsibility or environmental issues? How could it inform public or industry policy? How might it affect quality of life? Not all papers will have social implications. Originality/value: Showing that the use of the TMAI method to assess the financial condition of companies is possible and allows their classification in terms of building an investment portfolio even in "difficult" times, i.e. the COVID-19 pandemic. The article, the use of the method is useful for entrepreneurs and investors. Keywords: TMAI measure, linear ordering, investment portfolio. Category of the paper: research paper.