As we know, if we loss 20% of capital, it required 25% gained to recover the loss, does anyone have any suggestions on how to determine the optimial risk levels for portifolio? which level is more sustainable for mid term investment.
Thanks in advance for any suggestions
Risk | Gain for Recovered Lose
5% | 5%
10% | 11%
15% | 18%
20% | 25%
25% | 33%
30% | 43%
35% | 54%
40% | 67%
45% | 82%
50% | 100%
How to determine the optimial risk levels?
Ed Seykota, on his website discusses the topic of risk and calculates the optimal risk for a coin toss game with various payoffs.. . . does anyone have any suggestions on how to determine the optimial risk levels for portifolio
Perhaps you can find some useful information there.
Here is the link;
http://www.seykota.com/tribe/risk/index.htm
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Re: How to determine the optimial risk levels?
Ralph Vince covers this topic in considerable detail - with a fair bit of mathematics - in his books. I don't think you can get around the need for math in this area.oem7110 wrote:...does anyone have any suggestions on how to determine the optimial risk levels for portifolio? ...
I liked this one best:
"The Handbook of Portfolio Mathematics: Formulas for Optimal Allocation & Leverage" by Ralph Vince.
They mostly all cover similar ground. I think he has a draft version somewhere for free download. He is a very creative thinker though a bit messy.