Survival Guide for a Post-Pension World

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Overview

This book provides an overview of key investing topics that investors and advisors need to understand in developing investment management strategies to provide for long-term income or other goals.  The book draws together core concepts that Geoff Considine has explored in his articles on portfolio planning, along with new insights and strategies.  We explore the tools of portfolio management, the core asset classes that investors need to be aware of, and how to quantify risk and to determine whether a portfolio is a good match to a specific investor's needs.  A major theme that we explore is how to deal with risk and uncertainty in long-term planning.  Monte Carlo simulation is used to motivate many of the examples and we show a series of ways to get comfortable with Monte Carlo as a planning tool.

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Using Options in Wealth Management

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Overview

While there are many good books on the theoretical aspects of derivatives, there is a need for broad strategic discussions of the use of options as part of wealth management and portfolio planning. In this monograph, I present a coherent conceptual framework to help investors and advisors understand the ways that options can be useful in portfolio management. I have analyzed strategies proposed by Zvi Bodie, Nassim Taleb, and Mohammed El-Erian, among others. There is an abiding misconception that options are somehow risky and speculative. Options can be used in this manner, but they can also be used as part of well-considered wealth management plan. I am focused on the latter case. We start with an overview of the basics of options, and an overview of good free tools that are available for analyzing options. There is considerable discussion of how volatility is measured and how options prices provide estimates of future market volatility. In a later section, I discuss a number of ‘big picture’ themes that can motivate the use of options in portfolio management. These include consideration of the degree to which the risks associated with equities actually decline with long holding periods, starting from analysis by Zvi Bodie and moving through Nassim Taleb and, more recently, research from the University of Chicago. Much of the text is taken up with discussion of different strategies, from simple buy-write (aka covered call strategies) to how one might build a portfolio to bet on massive and unexpected market dislocations (both good and bad ‘black swans’). There is also discussion and analysis of strategies to exploit mis-pricing in the options markets.

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10 Principles of Financial Freedom

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Financial freedom is not entirely simple to define. You might define financial freedom as having so much money that they can do whatever you want, without regard for cost. Under this definition, only Warren Buffett and Bill Gates and people at that level of wealth have achieved financial freedom. I use a broader definition. Financial freedom is being able to choose how you spend your life rather than having your choices dictated by the demands of your debts, monthly bills, and other financial commitments. Financial freedom means that you have a life that is in balance. You may still work for a living, but your actions are aligned with your values, you have a financial plan that will take you to your long-term goals, and satisfy your values with regard to work, family, and success. This definition encompasses a more traditional view of financial independence, but it is considerably broader. This is not freedom from any need to get up in the morning—it is having the ability to choose your path in life rather than having your path determined by financial encumbrances. Vast numbers of people could achieve this type of financial freedom if they understood some basic principles and applied them in their daily lives.

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Yes, You Can Supercharge Your Portfolio!

Stein and DeMuth's book features Quantext Portfolio Planner.

Ben Stein and Phil DeMuth have done a great service to investors as well as Finance students and professors by writing a book that puts into practice the principles of modern portfolio theory. Kudos also go to Geoff Considine for harnessing the power of Excel to bring these insights to everyone's desktop. As a result of both the book and the QPP software, I now start off my investments class with a series of lectures and demonstrations to show students - in real time - why it's the whole portfolio that matters and, just as importantly, how we can "supercharge" our student-managed investment fund portfolio.  

Dr. Kenneth J. Martin, Regents Professor of Finance, New Mexico State University

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