>Do you seriously find this exercise helpful? Couldn't you just as
>easily back out the (von Neumann-Morgenstern, I presume) utility
>function you need to get an introspectively plausible answer? In other
>words, if you feel nervous with a SD of 20% of the mean, could looking
>at utility functio
William Dickens wrote:
> >>>Well what I suppose we should be using isn't either the SD or the Var, but the %
>of the maximum increase in utility that is possible with increasing diversification.
>Playing around with a few examples it looked to me that the gain in utility was
>inversely proport
Bryan wrote:
Right, but if you want to reduce the SD of your return, you've got to
square those numbers - you need 100 stocks to get the SD down by 90%.
And isn't that the measure of risk most people vaguely have in mind?
>>>Well what I suppose we should be using isn't either the SD or the Var,
William Dickens wrote:
> >>> Not that much. Assuming constant variance and correlation the variance fraction
>of the possible reduction you can get is inversely proportional to the number of
>stocks you hold (you get half the reduction relative to holding one stock by holding
>2 90% by holding
reet Journal that exchange-traded funds are a
> better deal than index mutual funds if you have $30,000. If you are able
> to accumulate $30,000 in cash every month, then mutual funds don't make
> sense.
Why would index mutual funds not mak
least $1 million
dollars lying around in your stock portfolio for that to be true.
I've read in the Wall Street Journal that exchange-traded funds are a better deal than
index mutual funds if you have $30,000. If you are able to accumulate $30,000 in cash
every month, then mutual funds don'
>>> [EMAIL PROTECTED] 07/14/02 14:19 PM >>>
If I want to buy shares in the 500 or so companies on the S&P 500, I'll be looking at
commissions of at least $3000, right
>>>That would be very low. I would guess that most people would pay roundtrip costs
>with a presnet value of about $15 for hold
James wrote:
If I hold those stocks for 20 years without ever rebalancing, thats $150/year.
Well, it is $3000 for the first year, and then $0 for the remaining 19 years. If you were to invest the $3000 at 5% per year, then you would receive $150/year before taxes. This $150 would wash with t
that to be true.
I've read in the Wall Street Journal that exchange-traded funds are a better deal than
index mutual funds if you have $30,000. If you are able to accumulate $30,000 in cash
every month, then mutual funds don't make sense. (That implies a disposable income of
at least
