Monday, October 19

Longterm investing, Risk definition, conservative

Define risk in terms of a worst case scenario for two
reasons. 

1. Symmetric risk measures is undesirable thus:. Positive deviations of returns from their means should not be considered as risk.
- As volatility implies. 

2. Considering risk as measured by worst case scenarios is seasonable ! 
-An investor is much more "fear full" in shaky seasons.
 
Conclusion:
Consider the highest realized loss to be the risk that matters most.

Gives us the OBJECTIVE:
-Build strategy that applies this risk measure for long term portfolio optimization.

Work path:
-Find and sort different mathematical risk measure tools, evaluate pros and cons.
-Brainstorm ways of applying these,(during a jog, sail, skii or a wine & beer evening).
-Evaluate all ideas, proceed with 2, the least & most logical.

WORK !
    

 
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