2014: The Sharp Ratio: Applying a Nobel Prize-Winning Concept to Income Property and Stocks

In this episode, Manny Kim from Giza Capital joins the show to discuss the Sharp Ratio and its application to income property. The Sharp Ratio, developed by William F. Sharp, measures the reward-to-variability ratio of an investment and is widely used in quantitative finance. It compares the excess return of an asset class to the standard deviation of that return, providing a single number to assess investment performance. This ratio allows for apples-to-apples comparisons between different asset classes, including real estate and stocks. Real estate tends to have lower volatility than stocks due to its lower liquidity, making it a potentially attractive investment. However, it is important to consider the assumptions and limitations of the Sharp Ratio, such as the stability of variance and the distribution of returns. By calculating the Sharp Ratio, investors can evaluate risk-adjusted returns and make informed investment decisions.   Website: https://gizacapital.com/ #SharpRatio #InvestmentPerformance #RealEstate #StockMarket #RiskAdjustedReturns Key Takeaways: Jason's editorial 1:25 Welcome to Portofino, Italy 4:49 "Buy and Hold" 6:09 The "Due On Sale" Clause- addressing the housing shortage 7:11 Massively low rates Manny Kim interview 8:46 Introducing the Sharpe Ratio 9:21 How and why the Sharpe Ratio applies to income property and not just the stock market 10:50 What is the Sharpe ratio 12:23 A theoretical sample 13:23 Income property- a better risk adjusted return 15:00 Pros and cons 17:16 Actual calculations for stock market and income property 18:28 Calculating the Sharpe ratio for the stock market 20:00 Doubling the Sharpe ratio with income property 21:27 Comparing the stock market versus income property   Follow Jason on TWITTER, INSTAGRAM & LINKEDIN Twitter.com/JasonHartmanROI Instagram.com/jasonhartman1/ Linkedin.com/in/jasonhartmaninvestor/ Call our Investment Counselors at: 1-800-HARTMAN (US) or visit: https://www.jasonhartman.com/ Free Class:  Easily get up to $250,000 in funding for real estate, business or anything else: http://JasonHartman.com/Fund CYA Protect Your Assets, Save Taxes & Estate Planning: http://JasonHartman.com/Protect Get wholesale real estate deals for investment or build a great business – Free Course: https://www.jasonhartman.com/deals Special Offer from Ron LeGrand: https://JasonHartman.com/Ron Free Mini-Book on Pandemic Investing: https://www.PandemicInvesting.com