Download pdf: Final Outline pg 1-4
Download pdf: Final Attachments A-H
Download pdf: Attachment F Addendum
Get a quick read of uncompensated risk: the law, definitions, CalPERS case studies, private sector examples, & see how returns increase by ½ to 1% and volatility is reduced:
- Download and save all 3 files
- Start on page 2 of outline by reading Uncompensated Risk Defined, The Bad Apple example, then go to Sample Scatter Chart Attachment A and read.
- Then page 3 bottom of the page WIRE HOUSE ROBO PORTFOLIO, read it and go to Attachment D – the bad apples in the Wirehouse portfolio are the high correlation between many of the 21 holdings *AND THAT IS UNCOMPENSATED RISK*– think that the portfolio is not diversified because if the highly correlated investments do well the portfolio will out-perform the benchmark by a great deal BUT if they do poorly the portfolio will under-perform the benchmark by a great deal.
- Now, look at the Attachment E which is the suggested portfolio. Note there are few highly correlated assets. It is prudently and reasonably diversified.
- Now go to Page 4 WEALTH MANAGEMENT PORTFOLIO in the outline. Read it and see Attachment F. The Actual portfolio had 515 holdings (wow, one would think they are diversified), but with only 38 holdings and a reduction of fees the Sample +alpha Portfolio out performs by almost 2%!
- Look at Attachment F Addendum which shows what has happened the 1st quarter of 2018 when volatility was high. Same difference and the actual portfolio lost money, the +Alpha Portfolio was slightly in the green.
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