A pattern I’ve seen over and over is that, when an investor starts to learn about passive investing, they get stuck trying to figure out how to allocate their portfolio. They can’t figure out exactly how much they want in Fund A as opposed to Fund B, and they can’t quite decide whether or not they should include Fund C.
As Rick Ferri explains this week, trying to find the precisely optimal portfolio is an exercise in futility — even for the experts with access to the best data and software — because the critical inputs (including average returns for asset classes and correlation between them) change meaningfully over time.
- Why Optimal Portfolios Are So Difficult to Create from Rick Ferri
- Back to Basics: Rebalancing from Jim Dahle
- Investing Advice for College Graduates from Manisha Thakor
- Investing Rule #1: Know Thyself from Barbara Friedberg
- Stock Market Forecasters Are Usually Incorrect from Allan Roth
- Correlations, Eh? from the Bogleheads forum
Other Money-Related Articles
- It’s OK to Pay a Fee from Harry Sit
Thanks for reading!