Applied Portfolio Management - Class 1 - Risk and Return

All slides are available on my Patreon page: https://www.patreon.com/PatrickBoyleOnFinanceBook Suggestions:Burton Malkiel, A Random Walk Down Wall Street (2007) https://amzn.to/2Hr2SW1Roger Lowenstein, Buffett: The Making of an American Capitalist (2008) https://amzn.to/3hUkFl6Jack Schwager, Market Wizards Series https://amzn.to/3a89diHJack Schwager, Market Sense And Nonsense (2013) https://amzn.to/3jerS0ZNassim Nicholas Taleb, Fooled By Randomness (2007) https://amzn.to/365wN08Victor Niederhoffer, Education of a Speculator (1998) https://amzn.to/2EuhMJZVictor Niederhoffer, Practical Speculation (2004) https://amzn.to/2Hr3nznDimson, E., Marsh, P., and M. Staunton, Triumph of the Optimists: 101 Years of Global Investment Returns (2002) https://amzn.to/363JWXGRoger Lowenstein, When Genius Failed (2001) https://amzn.to/364aHv7Ivan Boesky, Merger Mania (1985) https://amzn.to/3crKszQHoward Marks, The Most Important Thing (2011) https://amzn.to/30n89EXFrank Partnoy, F.I.A.S.C.O. (1999) https://amzn.to/366gGj4Michael Lewis, Liars Poker (1989) - The Big Short (2010) https://amzn.to/3mPjhE1Gregory Zuckerman, The Man Who Solved the Market (2019) https://amzn.to/2FVOZi8Patricks' Books:Statistics for Traders: https://amzn.to/3eerLA0Financial Derivatives: https://amzn.to/307ByTbCorporate Finance: https://amzn.to/3fn3rvC Visit our website: www.onfinance.orgFollow Patrick on Twitter Here: https://twitter.com/PatrickEBoyleRisk & Return in Finance.The higher the risk taken, the more greater the expected return should be, and conversely, the lower the risk, the more modest the expected return. In this class we learn about how traders and portfolio managers think about risk and return. We learn about indifference curves, diversification and the importance of correlation in building a portfolio. We learn about sharpe ratio, sortino ratio and beta.Often people are confused by the idea of the risk return tradeoff. They think that taking a higher risk means that you are guaranteed a higher return. Of course, if this was the case, risk would not be risky. In finance what the risk return tradeoff is referring to is the idea that an investor would only agree to take greater risk, if they believed that the positive outcomes were greater than the positive outcomes achieved for low risk investments. Learn more about your ad choices. Visit megaphone.fm/adchoices