I've been reading the chapters on Modern Portfolio Theory for two weeks now, and still having trouble to understand. I was this close to drop the course, and then I found your videos. This is by far the best explanation on portfolio variances that I found on the web. Thank you, hoping for more videos.
Hi Ronald, A few points I would like to comment on and hear your thoughts: 1. Doesn't a Geometric mean make more sense? 2. The three securities used in the video are not accounting for dividends nor does the model explicitly account for inflation (although, a 10% rf is pretty high). 3. What made you decide on the five-year period? What are your thoughts on time-series bias? After righting these three questions, I am now thinking that none of these securities have ANY payout; so, you can ignore my second question. I would opt to replace this question with regard to correlation in the portfolio. If I decided to become a financial planner, I wouldn't rely on any one factor. Perhaps, it is best to tell clients / potential clients that a weighted approach of different methods is most advantageous? Adam
Hi Ronald, I have a few questions. 1. How come you're not using CAPM to calculate the expected returns? 2. Does the time horizon for calculating expected returns have to match that of the variance of the returns? 3. How can you create a matrix array that enumerates all of the different weight combinations for a portfolio consisting of many stocks in Excel? Thank you.
Thank you for your videos. They are very helpful for me. How do you incorporate newer mutual funds that have only been around for a few years with index funds that have had some volatile events occur? For example, how do I incorporate a tech fund that is only three or four years when I want to capture the volatility of the financial meltdown?
I was wondering the same thing. My personal investment portfolio has a number of different assets, including equity and crypto. Some companies have been listed for decades but some of my stocks and crypto have only been purchasable for a few years. The best method I found was to use only use the same time horizon for the same dataset. Have you found any better ways of doing it?
Hi sir, what if the assignment said i must combine those in the portfolio (best risk free portfolio) with riskfree rate =0.75% to create another porfolio and ask me to calculate expected return and standard deviation of the new portfolio, can you please help me ? Thank you
I've been reading the chapters on Modern Portfolio Theory for two weeks now, and still having trouble to understand. I was this close to drop the course, and then I found your videos. This is by far the best explanation on portfolio variances that I found on the web.
Thank you, hoping for more videos.
Hi Ronald,
A few points I would like to comment on and hear your thoughts:
1. Doesn't a Geometric mean make more sense?
2. The three securities used in the video are not accounting for dividends nor does the model explicitly account for inflation (although, a 10% rf is pretty high).
3. What made you decide on the five-year period? What are your thoughts on time-series bias?
After righting these three questions, I am now thinking that none of these securities have ANY payout; so, you can ignore my second question. I would opt to replace this question with regard to correlation in the portfolio. If I decided to become a financial planner, I wouldn't rely on any one factor. Perhaps, it is best to tell clients / potential clients that a weighted approach of different methods is most advantageous?
Adam
Hi Ronald,
I have a few questions.
1. How come you're not using CAPM to calculate the expected returns?
2. Does the time horizon for calculating expected returns have to match that of the variance of the returns?
3. How can you create a matrix array that enumerates all of the different weight combinations for a portfolio consisting of many stocks in Excel?
Thank you.
Thank you for your videos. They are very helpful for me.
How do you incorporate newer mutual funds that have only been around for a few years with index funds that have had some volatile events occur? For example, how do I incorporate a tech fund that is only three or four years when I want to capture the volatility of the financial meltdown?
I was wondering the same thing. My personal investment portfolio has a number of different assets, including equity and crypto. Some companies have been listed for decades but some of my stocks and crypto have only been purchasable for a few years. The best method I found was to use only use the same time horizon for the same dataset. Have you found any better ways of doing it?
Thank you!! Great video
Hi sir, what if the assignment said i must combine those in the portfolio (best risk free portfolio) with riskfree rate =0.75% to create another porfolio and ask me to calculate expected return and standard deviation of the new portfolio, can you please help me ? Thank you
Why raise it to power 0.5
Same as taking the square root.