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Behaviorally modified portfolio
Any ideas on what appears to be a conflict in the text:
Schwser Book 1 Page 189: “Behaviorally moddifying a portfolio simply means constructing it according to the investor’s behavioral risk and return preferences. The strategy portfolio is probably not efficient from a modern portfolio theory perspective, but the investor is comfortable with it and will, thus, be more likely to adhere to the strategy.”
Schweser Book 1 Page 199: “By incorporating behavioral biases into clients’ IPSs, clients’ portfolios will tend to be closer to the efficient frontier, and clients will be more trusting and satisfied and tend to stay on track with their long term strategic plans.” |
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