Portfolio Management
When Diversification Fails
The above chart represents the return for nearly every combination of equity investments you could have made over the last year. No sector, style, world region or market cap escaped devaluing more than 25%. Compare this to the start of our last recession between 2000 and 2001.
Just within U.S. equities, proper diversification likely could have [...]
read more »Selling – All, Some, or None?
A popular technique in portfolio management is to sell incremental amounts of your holdings to lock in profits as your investment’s value rises. A lot of people refer to this as “taking some off the table.” The basic principle is that one can preserve their capital by selling part of the holdings. The strongest of [...]
read more »Devising a Sell Strategy
Over the last year or two, it hasn’t been the ability to pick stocks which has hurt my returns, instead it has often been the inability to pick when to sell. In the best case, I sit on a stock like Apple for twice as long as I intended but come out with similar return. [...]
read more »Event Risk: Two Perspectives
With the Fed’s opening of an emergency credit line for companies facing insolvency due to the current credit crisis, markets have rebounded swiftly and we’re looking at 2% days across the major indexes. I should be jumping for joy given that we haven’t seen such green days for a while now. Unfortunately, both of my [...]
read more »Portfolio Performance Excel File
Just got a comment on my last post during the “Portfolio Performance Metrics” series. I realized that I never did get the final post with a portfolio performance Excel file online. Here it is! Here’s an Excel file which allows you to calculate Sortino and Sharpe Ratios as well as Beta and Jensen’s Alpha and [...]
read more »Sortino Ratio
It’s been a while, but we’ll finally finish up the portfolio performance metrics that I intended to introduce during the whole portfolio performance series that I’ve been writing on and off over the last few weeks. If you remember, the last post was on the Sharpe Ratio. The Sharpe ratio is a slightly more exacting [...]
read more »
