In this issue:
- US stocks continue to top returns for global markets this week
- The bulls remain in control of our portfolio strategy benchmarks
In this issue:
How Much Bitcoin Should I Own? A Mathematical Answer
Adam Grealish (Betterment)
March 9, 2021
It goes without saying that this is a hard question to answer. But we can borrow a page from modern quantitative finance to help us arrive at a potential answer. For years, Wall Street “quants” have used a mathematical framework to manage their portfolios called the Black-Litterman model. Yes, the “Black” here is the same one from the famous Black-Scholes options pricing formula, Fischer Black. And “Litterman” is Robert Litterman, a longtime Goldman Sachs quant.
Without getting into too much detail, the model starts with a neutral, “equilibrium” portfolio and provides a mathematical formula for increasing your holdings based on your view of the world. What’s amazing is that it incorporates not just your estimate about how an investment might grow, but also your confidence in that estimate, and translates those inputs into a specific portfolio allocation.
* Fed’s Powell: US on track for a strong economic recovery
* Famine risk is rising for North Korea
* Violence erupts in Northern Ireland
* Blackrock’s green-investing fund is largest-ever ETF launch
* Will US plan to overhaul corporate taxes reverberate globally?
* Push to unionize Amazon in Alabama is stumbling
* Countries with highest incomes have 40% of world’s vaccinations
* China factory inflation in March at highest since 2018
* Higher inflation in China suggests tighter monetary policy may be near
* US jobless claims unexpectedly rose last week–well above consensus forecast: