March 1, 2018
Some of the stuff in portfolio management is so basic that we often forget how really basic it is. The building block of a portfolio is the position taken in some shares of a listed company as an investment or as a short-term speculative move. In both cases, the objective is to make a profit. We buy an asset and hold on to it, or resell it later on for a profit. Trading is simply doing the latter more often.
The problem is not with the understanding of the game, it comes from asking very basic questions, like: what, when, and how much. An even more basic question is: why initiate that trade, at that time, in the first place?
January 10^{th}, 2018
Portfolio management theory has had a lot of books written about it. However, few show how easy it can be to express the outcome of a large portfolio's total trading activity using a single mathematical equation.
I use a payoff matrix for simplicity and convenience. The outcome of a payoff matrix gives the total profit or loss of a stock trading strategy: Σ(H∙ΔP). It is a simple expression and it carries a big punch.