goals-based investing
Assets and liabilities in any portfolio should contribute to liquidity maintenance, income generation, preservation of capital, and growth.
Can goals-based portfolio theory bridge normative and descriptive investment theories?
Are markets more like horses or tractors?
What if our traditional models of choice are not measuring people’s true objectives?
To paraphrase Richard Thaler, all finance is behavioral. In the same spirit, all investment management should be goals-based.
Although a fundamentally important financial concept, modern or mean-variance portfolio theory (MPT) has been of little practical value to retail investors in their asset allocation. Hansi Mehrotra, CFA, believes it’s time to develop a more practical risk-management measure.