"I want to get rich and am willing to gamble"

[hlacheen]

Find good investments and concentrate your portfolio to them?

[ahnuld]

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In theory stocking up on high Beta companies should offer superior returns since the variance (which equals risk) is higher but I doubt it would.

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shouldn't finance mods know better than to regurgitate academic BS that not even the academics believe anymore?

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yeah, which is why I qualified my statement with words like
"in theory" and then said I doubt it would actually work.

[DcifrThs]

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Here are some spreadsheets to play around with major equity classes:

1972-2006 Asset Class Returns

Efficient Frontier Results

Not my spreadsheets, so I won't vouch for their accuracy, but I'd guess they're close enough for government work. Barron has looked at spreadsheets from this source before and says the Sharpe Ratio calculations are off.

There are surely ways to jack up your return/risk even farther, but all the asset classes in those spreadsheets can be implemented via low cost funds/etfs that eliminate company-specific diversifiable risk.

On Risk: The Std Deviations actually understate the drawdown risks of the various equities because of higher than normal kurtosis in equity return distributions. So, if you play around with 100% Emerging Markets or similar allocations you better be prepare for soul-crushing downswings.

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yea the sharpe ratio calculations don't take compounding into effect (and the 2nd link there seems to be broken).

they use Average(portfolio returns)-Average(tbill returns) to get the excess returns. it should be subtracting the tbill return from the portfolio return in each time period and then calculating the compound returns.

their sharpe ratios are historical underestimates in this case (sheets SP-72-06 and SP-85-06).

their historical data, however, looks good.

basically, it is a great improvement from a US stock/bond portfolio. HOWEVER, the portfolio isn't optimal in that you can do better. the historical sharpe ratios aren't really correct and do not reflect the current and future environment so basing a forward looking portfolio off of historical projections is a major mistake.

further, their "optimal" portfolio is 75% allocated to stocks in capital space and like 95% stocks in risk space. given that the equity markets are all now fairly highly linked, this portfolio is one big stock bet. not a good way to go.

Barron

[eastbay]

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At the end of 30 years you'd have about 7.5 million. If you discount that for the 4% inflation you get $2.3 million is present dollars.

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Granted it would be a pretty nice pace if you were 15. I'm not.

eastbay

[Evan]

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At the end of 30 years you'd have about 7.5 million. If you discount that for the 4% inflation you get $2.3 million is present dollars.

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Granted it would be a pretty nice pace if you were 15. I'm not.

eastbay

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Considering what the average retirement age is I don't think it's unreasonable to use 30 years. If you want to retire at 30 and be filthy rich then obviously you're going to need to do something differently. That isn't a realistic demand for most people though.

[kahntrutahn]

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If you want to retire at 30 and be filthy rich then obviously you're going to need to do something differently. That isn't a realistic demand for most people though.

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DING DING DING we have a winner!

Now, how...?

[bav]

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If you want to retire at 30 and be filthy rich then obviously you're going to need to do something differently. That isn't a realistic demand for most people though.

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DING DING DING we have a winner!

Now, how...?

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I recommend you invest in this: http://www.powerball.com

[AggroFish]

private placements...do a few a year for the next 10 years and one of them might hit for you.