Broken pie chart : 5 ways to build your investment portfolio to withstand and prosper in risky markets / Derek Moore.

Format:

Book

Contributor:

Moore, Derek, editor.

Language:

English

Subjects (All):

Portfolio management.

Financial risk management.

Securities.

Physical Description:

1 online resource (221 pages) : color illustrations

Edition:

First edition.

Other Title:

Broken pie chart : five ways to build your investment portfolio to withstand and prosper in risky markets

Place of Publication:

Bingley : Emerald, 2018.

Summary:

Investment outcomes and strategies have changed considerably since 2008. Broken Pie Chart demonstrates the failures of classical diversification and asset allocation, pointing out that the backward-looking methods used by traditional financial professionals will not work moving forward. Derek Moore explains why traditional risk-spreading leads to losses during sell-off periods, and contains risks that many investors do not recognize until it is too late. He also reflects on the changes in the financial market since the global financial crisis, and how these changes may affect your asset allocation and risk management decision-making in a landscape of lower rates and higher risks. With this work, readers can take a fresh look at their portfolios by identifying the emerging asset classes that will lead to investment success, using effective financial strategies to enhance their position, and placing smart floors, hedges and buffers to minimize risk.

Contents:

Front Cover

Broken Pie Chart

Copyright Page

Dedication

Contents

Acknowledgments

Preface: Did 2008 Teach Us Anything?

1 What's in Your Pie Chart?

1.1. Historical Return Averages

1.2. Lifecycle for Investors

1.3. Investors May Not Realize the Average of Shorter Time Periods

1.4. Issues with Traditional Asset Allocations in Shorter Time Periods

1.5. Historical Returns to Determine Probabilities

2 Why Bonds' Past Performance Can't Equal Future Results

2.1. Inflation Impact on Bond Yields

3 Target Date Surprise

3.1. 2008 Great Recession and Near-Term TARGET DATE Funds

3.2. Target Fund Composition

3.3. Hearings Point to Issues with TARGET DATE Funds

3.4. TARGET DATE Funds Do Not Individualize Advice

4 Why Diversification Fails

4.1. Are There Too Many Concentrated Assets in Exchange-Traded Funds?

4.2. Classic Asset Allocation Models

4.3. How about Diversifying through Sectors and Regions?

4.4. Fixed Income as a Hedge

4.5. Diversification During Short-Term Market Corrections

4.6. Dividend Stocks as a Hedge?

5 What If We Go Sideways or Down?

6 This Time Is Different?

6.1. Government Debt Expansion

6.2. State and Municipal Debt United States

6.3. Central Bank Balance Sheets

6.4. Inflation Has Not Risen, Yet

6.5. Currencies and Interest Rates

6.6. Have Low-Interest Rates Distorted Consumer Markets?

7 Why Sequence of Returns Matter

7.1. Savings

7.2. Inflation

7.3. Return on Investments (ROI)

8 Hard Floors and Hedges

8.1. Stop-Loss Orders

8.2. Stop-Loss Market

8.3. Stop-Loss Limit

8.4. Diversification and Exchange-Traded Funds

8.5. Why VIX Index Funds Are a Bad Long-Term Hedge

8.6. Problems with Classic Portfolio Asset Allocation as a Hedge

8.7. Introduction to Options

8.8. Hedged-Equity Strategies.

8.9. What Is the Down Side to Hedged Equity?

8.10. Factors to Consider

9 Volatility Is an Emerging Asset Class

9.1. What Is Volatility in Relation to Options?

9.2. Components of an Options Price

9.3. Option Greeks

9.4. Implied Volatility

9.5. Is Option Volatility Premium Selling Like Being an Insurance Company?

9.6. Probability-Based Option Premium Selling

9.7. Benefits and Risks in Premium Selling Strategies

10 Synthetics to Build Positions with a Seat Belt

10.1. Profit-and-Loss Graphs

10.2. Synthetic Positions Using Options Example

10.3. Synthetic Options to Collect Dividends

10.4. Structured Notes

10.5. Buffered Equity Strategies

10.6. Risk Shifting

10.7. Equity Risk

10.8. Buffered Equity Benefits to Risk-Adjusted Returns

10.9. Covered Calls Do Not Create Substantial Hedges or Buffers to Portfolios

10.10. White Swan Risk

11 Risk-Adjusted Returns Matter

11.1. Risk-Adjusted Returns

11.2. Sharpe Ratio

11.3. Sortino Ratio

11.4. Historical Sharpe Ratios: Equities and United States Treasuries

12 Final Thoughts

Bibliography.

Notes:

Includes index.

Includes bibliographical references.

Print version record

ISBN:

9781787439580

1787439585

9781787435537

1787435539