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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. […]
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 […]
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 […]
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 […]
Continuing on our portfolio metrics series, we’re looking at the Sharpe Ratio. The Sharpe ratio is very easily calculated. It’s simply the mean period return of your portfolio (typically monthly) minus the risk free rate for each period divided by the standard of deviation of the returns of your portfolio. The equation written out might […]
The previous two posts on alpha and beta being used as a measure of performance may lead you to think that alpha and beta would be a terrific way to choose investments. What’s not to like? Two easy to understand metrics which will allow you to take a look at a manager or a stock, […]
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