For More Information

Two relevant articles on this site: an overview of index funds, and an introduction to Monte Carlo retirement planning.


     The authority on risk and asset allocation is William F. Sharpe himself, who has many articles and interactive features available on his own website. He even has worksheets and market data that let you find standard deviations and covariances of real classes of investments.

Also see the website of Sharpe's company Financial Engines for an idea of how this approach is used in a commercial product. Be sure to try the simulation demo.

Here is a nice demo that lets you build the efficient frontier for two or more asset classes.

This CAPM article provides a good balance between readable English and gruesome math.

For information on the Fama and French three factor model, see Ken French's website, Dimensional Fund Advisors, DFA's retailer Index Funds Advisors, and this article on doing a three factor regression in a spreadsheet.

Morningstar offers a series of articles on investment risk, including a description of how they incorporate risk in their mutual fund ratings.


Also see the Recommended Books page.

     An outstanding introduction to this material is available in The Intelligent Asset Allocator, a book that uses plain language and well-chosen examples to make everything crystal clear. Also see the author's website, The Efficient Frontier.

If you'd like to read a good non-technical book on this subject, try Capital Ideas. To balance that with a more skeptical view, see A Random Walk Down Wall Street.

For individuals, putting portfolio theory to work comes down to investing in low cost index funds. Vanguard Group founder John Bogle gives you the facts in Common Sense on Mutual Funds.

Want to learn some stats the fun 'n' easy way? (No, really!) Try The Cartoon Guide to Statistics.


Article Contents
MPT Introduction
Volatility and Time
Efficient Frontier
Sharpe Ratio
Build a Portfolio
Index Investing
CAPM, Beta
Alpha, R-Squared
Three Factor Model
Insurance Analogy
Books & Links

Article Contents
Index Funds Article
CAPM Calculator
Market Simulator


home  |  article  |  glossary  |  calculator  |  about us  |  books