earlyride

Portfolio Diversification and Risk: The Basics of Beta

His section entitled "Beta and Risk Premium" maybe deceptively simplistic. How can one in reality derive a Security Market Line (SML)? It is difficult to compute both future betas and future expected returns. The statisitical distributions of security returns are constantly changing over time, and past returns and past betas computed with historical data do not guarrantee an accurate prediction of future betas and expected returns.

Why It's Going to Be a Long Recession

There are additional reasons for a pro longed recession. 1) Households are facing more severe liquidity constraints than in the past. Credit will continue to tightened, and consumer spending should gradually contract. 2) No new federal stimulus is coming. 3) In 2010, tax rates go back to the Clinton year levels.