A great data visualization – portfolio risk management

A great data visualization – portfolio risk management

One of the better financial data geeks (my opinion) published a great post today … this visualization is worth a year subscription to SA.

Geometric Standard Deviation Average

Why do I find this so valuable … compare the down points and remember what it felt like in 2010 as most stock prices dropped beyond what I thought was rational at the time. From a portfolio risk management perspective, those ~50% downs are important to use an inputs – my bear market experiences were in 1987 and 2000 and 2010 … none of these no matter how bad I thought they were compare with those 50% drops.

Question for portfolio managers: is your risk management that robust? I need to work on mine!

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