Diversification and the Market Portfolio
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 focuses on two major concepts: diversification …
READ MOREManaging a Portfolio’s Risk
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 your expected long-term returns. by Donald R. Chambers
READ MOREThe Asset Allocation Decision
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. Chambers
READ MOREInsurance and Risk in MPT
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. by Donald R. Chambers, PhD, Research Associate
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