Re: Some musings on portfolio construction based in the UK
Posted: August 3rd, 2021, 9:30 am
Hi 1nvest and ItsAllAGuess.
Thanks for the last two posts - I have no particular issue with either - they seem reasonably appropriate from what I understand to be your circumstances. However (and no criticism intended) not everyone has enough reserves to be only concerned about the risk of loss, or have "excess" capacity to have multi-year cash balances or secondary lines of defence or whatever. For these people, risk vs reward may be a very real consideration. As an aside, that is one area where I found the book interesting - optimising risk to hit a target reward (e.g. safe drawdown at a certain level) vs optimising reward to ensure a given level of risk.
Similar applies to me. Just like it took a while to get the point across above that no-one was suggesting paying for financial advice, no-one is suggesting Portfolio Manager style mathematics to optimise risk for the average punter. Indeed, if I (for example) were, I might have more than the four simple holdings per portfolio that I currently have.
Instead, I was suggesting that people are cognisant that reward (however it's measured) isn't the only game in town in the long term and that people should consider risk (however one is capable of measuring it) in so far as is reasonable for them. To do this, I was sharing my early path through that maze and some of the things I came across - both dead ends and useful ones.
Regards, Newroad
Thanks for the last two posts - I have no particular issue with either - they seem reasonably appropriate from what I understand to be your circumstances. However (and no criticism intended) not everyone has enough reserves to be only concerned about the risk of loss, or have "excess" capacity to have multi-year cash balances or secondary lines of defence or whatever. For these people, risk vs reward may be a very real consideration. As an aside, that is one area where I found the book interesting - optimising risk to hit a target reward (e.g. safe drawdown at a certain level) vs optimising reward to ensure a given level of risk.
Similar applies to me. Just like it took a while to get the point across above that no-one was suggesting paying for financial advice, no-one is suggesting Portfolio Manager style mathematics to optimise risk for the average punter. Indeed, if I (for example) were, I might have more than the four simple holdings per portfolio that I currently have.
Instead, I was suggesting that people are cognisant that reward (however it's measured) isn't the only game in town in the long term and that people should consider risk (however one is capable of measuring it) in so far as is reasonable for them. To do this, I was sharing my early path through that maze and some of the things I came across - both dead ends and useful ones.
Regards, Newroad