The low-volatility stock anomaly earned its name from its apparent contradiction of the capital asset pricing model (CAPM). In most markets, portfolios of low-volatility stocks actually produce higher risk-adjusted returns than portfolios of high-volatility stocks.
Despite numerous studies attempting to link volatility to changing fundamentals, research shows that investor emotions are the root cause of the vast majority of these price changes, according to C. Thomas Howard.
As modern portfolio theory fades in reputation from intense pressure from behavioral finance, many researchers are seeking to fill the void with behavioral finance applications. Behavioral portfolio management is one such model.
Today retirees face five perils: inflation, investment, longevity, withdrawal, and healthcare risk. Providend CEO Christopher Tan says retirees need a plan not only to cope with these risks but also to provide reliable income.
In an era of low investment returns, the traditional approach to asset allocation and portfolio management is giving way to a new model that holds the promise of working better during periods of instability and crisis.
Could it be that the Holy Grail has been spotted at the recent Chicago Board Options Exchange (CBOE) Risk Management Conference? Well not quite, but there was much… READ MORE ›
The chairman of Intelligence Capital laid out "seven rules of foreign exchange" that can help market practitioners manage their exchange rate exposures and clarify the future direction of currency markets.
We’ve all heard the old adage that diversification is the only free lunch in investing, but Paul Bouchey, CFA, debunked that notion at the CFA Institute Wealth Management 2012 conference in Miami. To be clear, Bouchey did not challenge the notion that we can reduce risk without sacrificing return through diversification. He did, however, call out another free lunch — volatility harvesting.
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