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  #1  
Old 02-13-2018, 01:51 PM
jtom jtom is offline
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Question task #2

How are we suppose to pick up an asset mix without current market information? It is not the way I would image it.
Do we target a generic market? and then hope that rebalancing will be enough, is that realistic?
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Old 02-13-2018, 02:40 PM
davesned29 davesned29 is offline
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this is why they give you a model which spits out results based on multiple asset mixes. They must want us to use the results of the model (and any other knowledge/information we have at our disposal based on the readings) to come up with an asset mix and justify it.
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Old 02-13-2018, 03:44 PM
PoisedGiraffe PoisedGiraffe is offline
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I provided a target asset mix for the optimal market, an optimistic market, and a conservative market using the provided table in the intro. I know that's overkill for what they ask in the question. Considering it's on your mind, though I think you could incorporate all 3 and say you provided them because you are concerned about market conditions.

Alternatively, for 2 I really think you just need the optimal market mix. I think if you just came up with your target mix and mentioned what you'd do in those other scenarios, that'd be fine too.
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Old 02-13-2018, 03:51 PM
jtom jtom is offline
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The question is about how to choose only one. I was able to narrow them down and to select the ones according to portfolio theory but do I need only one?
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Old 02-13-2018, 04:02 PM
davesned29 davesned29 is offline
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Quote:
Originally Posted by PoisedGiraffe View Post
I provided a target asset mix for the optimal market, an optimistic market, and a conservative market using the provided table in the intro. I know that's overkill for what they ask in the question. Considering it's on your mind, though I think you could incorporate all 3 and say you provided them because you are concerned about market conditions.

Alternatively, for 2 I really think you just need the optimal market mix. I think if you just came up with your target mix and mentioned what you'd do in those other scenarios, that'd be fine too.
Glad you mentioned this, since I neglected to. I think copying the format of the chart in the intro (including a target mix, conservative mix, and aggressive mix) is very good advice.
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Old 02-13-2018, 05:30 PM
PoisedGiraffe PoisedGiraffe is offline
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Quote:
Originally Posted by jtom View Post
The question is about how to choose only one. I was able to narrow them down and to select the ones according to portfolio theory but do I need only one?
What do you mean by "one?" One asset mix?
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Old 02-18-2018, 11:08 PM
ac_727 ac_727 is offline
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Bond is less risky than equities and has higher return than Treasury Bills. So I decide to have at least 50% bond in my portfolio for target mix, range, adverse market target and optimistic market target.

Does this make sense?
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Old 02-18-2018, 11:57 PM
arto83 arto83 is offline
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Quote:
Originally Posted by ac_727 View Post
Bond is less risky than equities and has higher return than Treasury Bills. So I decide to have at least 50% bond in my portfolio for target mix, range, adverse market target and optimistic market target.

Does this make sense?
As long as you can justify it in the task. I felt I needed soem starting logical point like you have but then I also backed it up with scenario statistics output in the simulations. I added between 10 and 20 more scenarios.
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Old 02-19-2018, 12:04 AM
ac_727 ac_727 is offline
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How do you figure out the asset mix range?
Do you center around the target mix?
How do you justify it?
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Old 02-19-2018, 12:29 AM
arto83 arto83 is offline
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I set scenarios that went to all extremes then decided what stats I liked for reasonableneas (part 1) and then supported those with soem secondary numbers, with what returned what I felt was a reasonable tax rate based on the economy. There's no real right way as others have said, only an appropriate justification.
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