Original Sales Page: https://university.tradingdominion.com/p/portfolio-investing
Trading Dominion – Ray Dalio – Portfolio Investing
Get steady and consistent returns with low drawdowns,
spending just 20 mins per month
Do you need steady returns with low drawdowns?
Sure. Doesn’t everybody?
The problem is that we’re led to believe that investing our own money is too risky and we should therefore use hedge funds in order to take care of our long term investments.
Financial concepts tend to sound quite complicated and involve either having to get deep into the weeds with complicated financial formulas, or resorting to having to become a programmer in order to code up even a simple investment strategy.
Ray Dalio claims to have found the Holy Grail
While the average hedge fund performance has been lackluster, there are certain hedge funds that do perform very well. Ray Dalio runs one of the largest hedge funds in the world, called Bridgewater Associates, which as of 2018 manages over 125 billion in customer funds. Ray Dalio himself is a billionaire. So when a person like this makes a statement about having found the Holy Grail, then perhaps we should pay attention.
Here is a short 4 min video, where Ray Dalio explains the concept of the Holy Grail. Note that he’ll reference a bunch of terms that you may be unfamiliar with (standard deviation, correlation, alpha, information ratio, etc). Don’t worry, by the time you complete this course, you’ll know and fully understand all of these financial terms.
The main point he’s making is that the Holy Grail can be achieved by trading a variety of trading strategies or portfolios, where the return of each of these portfolios is unrelated to the others. When one strategy or portfolio is losing money, then hopefully the others aren’t losing money at the same time.
The keys are to:
a) have a variety of different portfolio strategies to choose from
b) be able to measure the degree of correlation between these strategies
You’ll be learning both of the above in this course.
It’s time to make a change
The main aim of this course is to explain all of those technical financial terms in a way that is simple and easy to understand.
Many of the concepts are explained visually, and we focus on understanding the core idea without getting deep into the weeds.
We focus on things that are practical, and are later applied onto the analysis of real portfolios.
We will build some spreadsheets together, step by step, in order to make sure that the concepts and calculations are fully understood and internalized.
We’ll make use of some extremely powerful and functional online tools that can automate much of the portfolio analysis, and all without needing to write a single line of code.
In the course we’ll cover around a dozen or so pre-made portfolios that you can start off with. Additional portfolios and trading strategy ideas will be added over time, as our community continues to grow and share ideas.
Course contents
Introduction
- Welcome to the course
- Strategic versus tactical asset allocation
- Introduction to bonds
- Asset classes
- Hedge funds
- How data can trick you
Returns
- Getting historical data
- Linear versus log scale
- Arithmetic and log price returns
- Cumulative arithmetic and log price returns
- Converting arithmetic and log returns
- Arithmetic and geometric mean
- Wealth index
- Performance charts
Measuring risk
- Variance and standard deviation
- The portfolio effect
- Sharpe ratio, Sortino ratio, Calmar Ratio, Martin Ratio
- Alpha and Beta
- Correlation and R Squared
- Treynor Ratio and Information Ratio
- Value-At-Risk and Expected Shortfall
Factor models
- Capital Asset Pricing Model (CAPM)
- Fama French 3 factor model
Permanent portfolios
- Equal and Value Weighting portfolios
- Calculating portfolio returns
- Review of 5 different permanent portfolios
Moving average filters
- M.A.F. – single asset
- M.A.F. – all assets in a portfolio
Modern Portfolio Theory
- Introduction to MPT
- Correlation and the correlation matrix
- Efficient frontier
- Minimum variance portfolio and mean-variance efficient portfolios
- Rebalancing
- Return vs risk graph
- Capital Allocation Line, and margin effect on returns
- Kelly Criterion – optimal f
- Inverse variance portfolio
- Risk parity portfolio
Dual Momentum
- Review of 6 different dual momentum portfolios
Other portfolios
- Review of two Adaptive Allocation portfolios
- Review of two Core-Satellite portfolios
