Financial Markets

Modern Portfolio Theory Part 9 | June 20, 2011 Non-traditional investments can strengthen individual portfolios. But they must satisfy three key criteria. by Donald R. Chambers, PhD, Research Associate

Modern Portfolio Theory Part 8 | May 16, 2011 There are only two reasons to reconsider target allocations. Neither are determined by outside circumstances. by Donald R. Chambers, PhD, Research […]

Modern Portfolio Theory Part 7 | April, 18, 2011 Trading strategies are like casino gambling. You pay your money and you take your chances. But there are more reliable ways […]

Managing the Riskless Portfolio An investor can limit risk by reducing the portion of her wealth exposed to the risky market portfolio and increasing her holdings in the riskless portfolio. […]

Introduction and Overview Modern Portfolio Theory suggests that you can maximize your investment returns, given the amount of risk (or volatility) you are willing to take on. This is the […]

Diversification and the Market Portfolio This is the second in a ten-part series exploring the implications of modern portfolio theory (MPT) for common investment decisions faced by individuals. This part […]

Managing a Portfolio’s Risk Using a four-step plan, you can select a portfolio allocation that generates the desired risk exposure. The more volatility (risk) you can take on, the higher […]

The Asset Allocation Decision Investment choices should be based on realistic forecasts of the risk-return trade-off and the investor’s personal preferences about how much risk to undertake. by Donald R. […]

Insurance and Risk in MPT While there are limits on how fully investors can diversify the market portfolio, in practice insurance pools risk so that everyone can enjoy substantial diversification. […]