Re: My daughter is a millionaire
[ QUOTE ]
[ QUOTE ]
When viewed in the context of your statements, it seems logical that the way to achieve this would be to take the optimal non-leveraged portfolio and essentially leverage everything equally to achieve the desired level of risk.
[/ QUOTE ]
only if the cost of leverage is equal across assets, which I'd bet it isn't.
[ QUOTE ]
I had always listened to the standard advice of don't invest on margin and pretty much just took it at face value, but now that I understand things better, I feel like using leverage may not be as irresponsible as many (well-meaning) folks seem to think. It will just require a good understanding of my true portfolio risk levels and my risk tolerance.
[/ QUOTE ]
the "standard advice" is standard because most people don't really have that understanding.
[/ QUOTE ]
the cost of leverage overall is very minimal in comparison to the "savings" you get in return. the variability of cost of leverage accross assets means that you just have to either suck it up and take that drift down from the "optimal" portfolio or re-shuffle your allocations to take the cost into account.
Barron
|