administrator Site Admin
Joined: 28 Dec 2005 Posts: 12651
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Posted: Thu Apr 17, 2008 5:51 pm Post subject: Portfolio Optimization |
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To make big gains, big risks must be taken, which can result in big losses instead, or more volatility.
However, there are at least two ways to capture gains:
A) If a portfolio rises e.g. from $100,000 to $150,000, then $50,000 is withdrawn and invested in "safe" investments. Gains should be withdrawn periodically to lower risk.
B) If a new $100,000 portfolio is invested for management every three months, one of those portfolios should eventually hit it big (e.g. $100,000 into $500,000), because of timing. Consequently, the management fee (based on performance) will be high (e.g. $200,000).
George Soros stated: It's not whether you're right or wrong that's important, but how much you make when you're right and how much you lose when you're wrong.
Of course, you also want to be right more often than wrong, while not losing everything in a losing streak. |
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