Portfolio Management
Sharpe Ratio
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 [...]
read more »Criticisms of Alpha and Beta
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, [...]
read more »Portfolio Metrics: Alpha
So, now you know how to calculate beta and figure out how volatile your portfolio or individual stocks have been relative to the market. Essentially, a backwards looking statistic on how much “risk” (more appropriately how much volatility) you took on in the last x-periods with x being how ever far back you decided to [...]
read more »Portfolio Metrics: Beta
You may all have noticed the new tags on the site with “Covestor” listed. Basically, it’s a trade-sharing service which seeks to gives investing enthusiasts a way to establish an investment track record by both providing a third-party validation of returns as well as reporting of conventional portfolio performance metrics. I’ll discuss the site more [...]
read more »Dividend Reinvestment Plan
Last week we discussed the value of dividends in down markets as well as in stock returns overall. The conclusion was reached that investing in dividend paying stocks offers a terrific balance of income and stability which is important in down markets and has a positive effect on a portfolio in the long term. For [...]
read more »Feeling Defensive?
While I’m of the camp that believes that the subprime meltdown will be relatively contained and that the economy and the stock markets will get through this current correction without a collapse in prices, there’s really no way to know for sure. The last few weeks may triggered profit taking or stop losses in your [...]
read more »
