Portfolio Diversification and Supporting Financial Institutions (CAPM Model) – Yale, Econ 252, 4.1
Posted on | February 4, 2009 | 2 Comments
This is synopsis one of two from lecture four of Dr. Shiller’s Yale ECON 252 course: Financial Markets. Go to the ECON 252 link to access all synopses to this point.
A portfolio is a collection of assets. The ultimate goal is to be concerned with the entire portfolio and not just one or two assests within the portfolio. The measure of the outcome is done by the mean of the return. Individuals want a return as high as possible with a variance as low as possible because variance is considered risk.
Most of the initial part of the lecture was shown in graphs and equations and can be found at the link here under resources. The intent of this was to show that individuals should desire to invest in as many independent assets as possible to lower their risk.
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February 7th, 2009 @ 9:17 pm
In the graphs and during the lecture, Dr. Shiller speaks of improving a portfolio’s yield/variance by adding oil to the asset mix. What is the best way for an individual investor to add oil to his portfolio.
February 7th, 2009 @ 10:06 pm
The DBO etf is probably the best way as it incorporates the entire energy complex or USO is a direct relation to just oil.