31 Oct 2016

Equity Risk Dominates Your Portfolio

When I describe ‘balance’ in a portfolio, here or in person, I am almost inevitably talking about an allocation that is somewhat evenly split between stocks and bonds.  I don’t have to specify that I am talking about how much money is in each allocation (forgetting for a moment all of the sub allocations). In recent years, however, some investment managers have pointed out that a portfolio that is evenly… Read More

By David Ott Tags: , , , , , , ,
21 Dec 2015

Analyzing Air Force Bombers

I read an interesting story recently about risk management in a book titled Red Blooded Risk by Aaron Brown. During World War II, the Air Force was trying to figure out the optimal amount of armor that should be added to it’s bombers.  Since every pound of armor means one few pound of bombs, it means that more bombing runs will be needed to deliver the same payload. The Air… Read More

By David Ott Tags:
20 Aug 2014

Avoiding Risk Can Be Risky

In my opinion, one of the most amazing stories this year is the surprise drop in interest rates. The 10-year US Treasury note started the year at three percent and nearly everyone, including me, expected interest rates to rise this year (but for the short end, which is controlled by the Fed). Today, the 10-year closed at a yield of 2.40 percent and closed as low as 2.34 percent last… Read More

By David Ott Tags:
22 May 2014

Bank Loan Risks

Interest rates are low and many investors are worried about rising rates, which can hurt bond prices.  As always, Wall Street has rushed to the aid of investors by creating products to meet this need, just as they did with internet funds in the late 1990s and real estate funds during the bubble. One of the ‘solutions’ that Wall Street has created to meet investor demand is something called a… Read More

By David Ott Tags: ,