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- 9. For Ten Years Ending June 2009 (Annual Returns) R E T U R N Modern Portfolio Letter Long term Portfolio 11.18% + S&P 500 Return Short Term Portfolio 7.6% + S& P 500 Return T-bills +3.22% RISK S&P 500 -2.25%
Editor's Notes
- Upward sloping line: For more return need to take more risk.
- High Risk: Too Few Stock 1 to 3 Stocks No diversification only in own occupation, or cocktail party stocks
- Increase stock holds to at least 8 stocks Diversify between domestic and foreign stocks Arbitrage Theory: * Cyclical Stocks * Defensive Stocks * Interest Sensitive Stocks * Inflation Sensitive Stocks
- Valuations Price to Earnings Price to Cash Flow
- Income Statement Cash Flow Statement Balance Sheet Price to Earnings is Greater than the Price to Cash Flow Debt is low to Assets or Low to Competition
- Upward sloping line: For more return need to take more risk.
- How to grade your self