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Are you tilted? (Frank Armstrong)
Old 06-03-2006, 02:25 PM   #1
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Are you tilted? (Frank Armstrong)

It’s really pretty easy to design a more “efficient” or optimal portfolio. It’s actually elementary stuff taught in almost every graduate finance class. It’s not a state secret, and it’s not rocket science.

First, we can jettison a boatload of risk by simply shifting from a domestic to a global portfolio. We will have an almost identical rate of return expectation at significantly lower risk. (A global portfolio would have a proportional weighting of all the global equities rather than just the United States. To greatly oversimplify, in round numbers this might be a 50/50 domestic/foreign portfolio.)

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Re: Are you tilted? (Frank Armstrong)
Old 06-03-2006, 05:27 PM   #2
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Re: Are you tilted? (Frank Armstrong)

These efficient frontier guys are too much- they all make their money by telling others that real money cannot be made, and billing them for this service.

I prefer to emulate people who have made money in the markets, not servicing* the markets.


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Re: Are you tilted? (Frank Armstrong)
Old 06-03-2006, 06:16 PM   #3
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Re: Are you tilted? (Frank Armstrong)

we can jettison a boatload of risk by simply shifting from a domestic to a global portfolio
i suspect this is a gross oversimplification.* most all US individual investors live within country, and when investing domestically avoid a boatload of risk that foreign investors assume when investing in the US.* this reduced risk should result in a portfolio more heavily weighted toward domestic issues.*

stated a bit differently, take two identical investements which differ only in that one is domestic, the other foreign.* the foreign investment is subject to currency risk while the domestic issue is not.* add to this additional risks reflecting relative policitcal stablility, legal protection, accounting standards and transparency, market efficiency etc. etc. etc. and the result would/should be an overweighting of domestic investments.

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Re: Are you tilted? (Frank Armstrong)
Old 06-03-2006, 08:32 PM   #4
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Re: Are you tilted? (Frank Armstrong)

Yeah, another advisor I had read advised somthing similar.* I think it was Meriman, but I'm not positive.* Their argument was that you need to split your domestic investments in half and go International because you do not want what happened to the Japanese market happen to you.* To a point I agree, but not going a full 50% international.* * I feel like if the US markets were to implode, then just about everything would implode as well (except perhaps China )
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