Comments on: Boom Boom PAO http://venturepopulist.com/2009/07/boom-boom-pao/ "Venture to the People" Mon, 22 Feb 2010 23:32:54 -0500 http://wordpress.org/?v=2.8.6 hourly 1 By: Venture Populist » Blog Archive » Playing The Angel http://venturepopulist.com/2009/07/boom-boom-pao/comment-page-1/#comment-202 Venture Populist » Blog Archive » Playing The Angel Mon, 28 Sep 2009 23:34:00 +0000 http://venturepopulist.com/?p=865#comment-202 [...] result of private enterprise and private venture investments characterized by their potential for positive asymmetric outcomes.   You embrace Modern Portfolio Theory.  Despite its flaws, MPT advocates [...] [...] result of private enterprise and private venture investments characterized by their potential for positive asymmetric outcomes.   You embrace Modern Portfolio Theory.  Despite its flaws, MPT advocates [...]

]]> By: Kirk Spano http://venturepopulist.com/2009/07/boom-boom-pao/comment-page-1/#comment-93 Kirk Spano Tue, 11 Aug 2009 18:48:30 +0000 http://venturepopulist.com/?p=865#comment-93 Please stop telling investment advisors the flaws in MPT until I reach a $Billion under management. At the rate I am taking the accounts of brokers and sales people wrapped in fees, I should get there at a pretty rapid rate. In all seriousness, a core investment asset allocation makes sense, which is what most adivsors are trying to find with MPT. The problem with MPT is that it is so backward looking that it becomes little more than an art project with little real use. A qualified advisor (does about 20% sound right) who is forward looking can use MPT as background information, but to invest in assets that we know are at a disadvantage because the pie chart says to makes no common sense. Interestingly, even advisors who sense that MPT is a trap, and are looknig for alternatives are having a hard time since they lack basic education on investments and economics. Many are piling into alternatives such as managed futures. If I had to bet, and I guess I do, I'd bet that several of the funds taking big assets right now get hammered sometime soon. Please stop telling investment advisors the flaws in MPT until I reach a $Billion under management. At the rate I am taking the accounts of brokers and sales people wrapped in fees, I should get there at a pretty rapid rate.

In all seriousness, a core investment asset allocation makes sense, which is what most adivsors are trying to find with MPT. The problem with MPT is that it is so backward looking that it becomes little more than an art project with little real use. A qualified advisor (does about 20% sound right) who is forward looking can use MPT as background information, but to invest in assets that we know are at a disadvantage because the pie chart says to makes no common sense.

Interestingly, even advisors who sense that MPT is a trap, and are looknig for alternatives are having a hard time since they lack basic education on investments and economics. Many are piling into alternatives such as managed futures. If I had to bet, and I guess I do, I’d bet that several of the funds taking big assets right now get hammered sometime soon.

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