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  • Optimizing The "Ivy 20" Portfolio  [View article]
    You can do much (if not all) of this analysis by using the Optimizer function in Excel. The advantage is that having to do it a little "by hand" requires you to have a good understanding of those components of Portfolio Theory that are useful in the practical world, and those that are not because they are too theoretical and/or not predictive.

    Far more important, if you don't already have a pretty substantial background in MPT so as to know its strengths and weaknesses, I'd suggest you're likely to be doing yourself far more harm than good by trying to use tools such as these. It's kinda like giving a Ferrari to a 16 year old kid who just got his license. He knows what the steering wheel, gas and brake pedals do, but that doesn't mean he can't get in a lot of trouble very quickly.

    Proceed with caution.
    Mar 23, 2013. 11:41 PM | Likes Like |Link to Comment
  • The Quest For Non-Correlation  [View article]
    I don't think your goal is to have zero correlation. Your goal is to maximize your expected portfolio return for your desired risk level. A second check would be to see if a portfolio with lower risk/std deviation will have the same expected return, in which case you'd probably be better off with that one, assuming that it is still reasonably well diversified across asset classes.

    Keep in mind that MPT is useful, but it does have limitations. I think that you may be expecting too much from it...
    Jan 14, 2013. 04:22 AM | Likes Like |Link to Comment
  • The Quest For Non-Correlation  [View article]
    1) I'm not sure what the purpose is of comparing the asset classes to individual securities, and these ones in particular. Noreasonable person would build a portfolio solely with a few individual securities.

    2) I believe your assertion that high negatively-correlated assets aren't as beneficial is flawed. (As mentioned by pantograph above). You are neglecting the fact that the average returns for SPY and TLT are different. Also, reducing overall portfolio volatility permits one to increase the allocation to the higher return equity-oriented classes, and hence achieve higher expected returns.

    3) I think you need more asset classes than you have included, which will provide additional diversification, permitting higher allocations to higher-return asset classes.

    As someone with a background in finance, is well versed in MPT, and has done numerous analytical portfolio analyses over many years, I would encourage you to be very careful drawing conclusions from these types of analysis. There are things to be learned, but in the end you are trying to model something that is largely driven by human psychology. It is very easy to read things in the data that aren't really there.
    Dec 31, 2012. 08:05 AM | Likes Like |Link to Comment
  • The Foundation Of Options Trading  [View article]
    I hadn't realized that Boehner caused the shooting last week...
    Dec 19, 2012. 12:18 PM | 2 Likes Like |Link to Comment
  • 3 Tips To Improving Your Dividend Growth Returns  [View article]
    The fundamental problem with GE is that Jeff Immelt is no Jack Welch. Elevating him to CEO is probably the single biggest mistake Welch has made in an otherwise stellar career.

    Immelt should spend more time running the company, and less time playing buddy buddy with Obama, and investing in politically correct businesses that have poor business models.

    Until Immelt is gone, I'd stay away from GE (and I used to work there many years ago when Reg Jones and Welch were running the company).
    Apr 23, 2012. 11:40 AM | 1 Like Like |Link to Comment
  • How To Become Your Own Options Risk Master  [View article]
    Kevin -- I think we all heard you the first time...
    Mar 13, 2012. 08:36 PM | Likes Like |Link to Comment
  • How To Become Your Own Options Risk Master  [View article]
    Thanks, Kim. Do you ever consider support and/or resistance levels when selecting strike prices? Or only do only one side of the IC (i.e. either a put spread OR a call spread) when the underlying stock is trending rather than range bound? Thanks in advance.
    Mar 13, 2012. 08:18 PM | Likes Like |Link to Comment
  • How To Become Your Own Options Risk Master  [View article]
    Kim -- since you are typically out of the trade more than a week before expiration, typically how long before expiration do you enter the trade?

    Thanks for you help.
    Mar 13, 2012. 06:40 PM | Likes Like |Link to Comment
  • How Trading Apple Can Bring Both Rags And Riches  [View article]
    Samson: Since you ask, "Is it the success of the strategy or identifying the right stock?" -- I suspect most of those who have more experience trading options will agree that you were lucky to pick the right stock at the right time, and that you took on much, much more risk than you realize and would be comfortable with.
    Will you let us know when you find out that your experience is not "generalizeable" and you lose $200K?

    Sometimes the best lessons come from the trades where you lose money, rather than make money. I suspect you will likely learn a few "good lessons" in the future...
    Mar 3, 2012. 04:55 PM | Likes Like |Link to Comment
  • How Trading Apple Can Bring Both Rags And Riches  [View article]
    And I for one will continue to focus on Rocco's and Kim's comments, while saving time not reading any more of yours...

    What is it with this thread? I've been reading SA for some time now, and, well, some people -- good grief!
    Mar 2, 2012. 07:51 PM | Likes Like |Link to Comment
  • How Trading Apple Can Bring Both Rags And Riches  [View article]
    Samson -- have you noticed that the people who have the most insightful comments here (e.g. Rocco, Kim, unremitting) never talk about how much $$$ money they made/lost on their trades -- like you do? Have you noticed their comments engender lots of other well-thought-out comments and notes of appreciation -- whereas no one seems to respond to yours? Think there might be a reason?
    Mar 2, 2012. 07:46 PM | 1 Like Like |Link to Comment
  • Proposed Dividend Tax Is As Uninformed As It Is Naive  [View article]
    There's a great way to reduce the inequality of income in the U.S. -- get a job! Stop wasting your time playing videogames, getting high, or making clueless posts on SA. Better yet, go to the library, get a book, and learn something useful about finance, business, and how the real world works so you can better yourself.

    Whether you realize it or not, the government could take every dime every person in the US has, and it still wouldn't be enough to pay off the debt and unfunded liabilities -- and it clearly isn't going to confiscate the entirety of everyone's assets in any event. This means that, in the end, we're all on our own.

    And if you are on welfare, you should have to do at least some work for it -- I'm not saying a 40 hour work week, but at least do something. My mother used to say that it wouldn't hurt if people on welfare would have to spend an hour or two a week cleaning their street. It would at least give them their dignity back and make them feel that they were contributing something, not simply living on the dole. But I realize that's just too much to ask for some people!
    Mar 2, 2012. 04:24 PM | 1 Like Like |Link to Comment
  • Proposed Dividend Tax Is As Uninformed As It Is Naive  [View article]
    I doubt that 8thman has what it takes to start a company. Methinks he's a "talker", not a "doer".

    People like 8thman find it easier to complain than to work hard, take risks, and improve their life. Sadly, like many other commenters in this thread, he doesn't realize that, as a smart man once told me, "$hit flows downhill." It isn't necessarily right, but that's the world we live in. Complaining isn't likely to change things for them.
    Mar 2, 2012. 04:12 PM | Likes Like |Link to Comment
  • Proposed Dividend Tax Is As Uninformed As It Is Naive  [View article]
    Obama (and many other people) doesn't realize that the vast majority of those who make > $250K do so because they worked harder, smarter, and took more risks -- in other words, they deserve what they earned. But Obama doesn't understand this because he's never had to work very hard or take any risks. The only thing of significance that he's ever accomplished is getting elected.

    But unlike Obama, who has a nice pension and numerous ways to make money after he leaves office, most poor people are likely to stay that way because his policies will only reduce opportunities for them to make a better life for themselves. Sadly, these same people don't realize that voting for him will only hurt them even more in the end.
    Mar 2, 2012. 04:02 PM | 3 Likes Like |Link to Comment
  • Myths And Misconceptions Of Options Trading  [View article]
    Great article, Kim!
    Feb 28, 2012. 11:56 AM | Likes Like |Link to Comment