private wealth has a lot of changes....read the cfa curriculum.. economics has changed a lot as well stops at 7.

19g end of readings dropped asset allocation has changed a lot aswell fixedincome stops at 10.25m...reading at end are dropped equity mnmgmnt stops at 12.28d end of readings are dropped alternative investments ahs changed risk management has changed a lot.. performance stops at 17.41.t end of readings have been dropped **under performance..monitor and rebalancing video 40....know the 3 dynamic asse t allocation strategies..buy and hold, constand mix, constand proportion portfoli insurance ( CPPI)..know payoffs in up, down and non trending markets for each and determine the risk tolerance. ***these strategies assume we only invest in equities and cash, no fixed income i.e risk tolerance is zero at the floor value, becuase it means we are all cash no equity at that point we can set the floor value, where we want depending on the market buy and hold (linear) - passive (has floor value) constant mix (concave) - active (has no floor value, also a contrarian strateg y, does poorly in a trending market, does well in flat or volatile market.a bsolute risk tolerance increases with wealth,relative risk is consta nt between cash and equity, tax effect may be material) CPPI (convex) - momentum strategy, active, buys equities faster than the market increases and sells equities faster than the market decreases, amount held in stock is a constant proportion (>1)of cushion between total portfolio value and floor value zero risk tolerance when we reach floor value, risk tolerance increases ra pidly above the floor becuase we trend with the market quicker than the market.performs poorly in flat, volatile mkt. performs well in trending mkt, protects downside risk in bear market. taxe s can be material. $ in stock = m x (portfolio value - floor value) m is >1 slope factor, difference between port value and floor value is the cushion CPPI UNDERFORMS BOTH OTHER STRATEGIES IN A FLAT, OSCILLATING MARKET ( MEANS A D OWN UP MARKET) LOOK AT THE EFFECT ON A TRENDING MARKET FOR ALL STRATEGIES...UP UP MARKET OR DOW N DOWN MARKET. DOWN DOWN MARKET - CONSTANT MIX UNDERFORMS BUY AND HOLD..CPPI HAS HIGHEST VALUE UP UP MARKET - CONSTANT MIX UNDERFORMS THE BUY AND HOLD.

CPPI IS BETTER THANBUY AND HOLD WHICH IS BETTER THAN CONSTANT MIX IN A TRENDING MARKET. cppi protects downside risk, like insurance. *******KNOW THE PERFORMANCE EVALUATION READING WELL..IT HAS ALYWAYS BEEN TESTED AND LOTS OF FORMULAS.. REMEMBER TO RELATE THE RETURNS IN PERFORMANCE TO GIPS MACRO PERFORMANCE ATTRIBUTION WAS TESTED A LOT MORE THAN MICRO..MICRO MAYBE AN I TEM SET.. *****8(PLAN SPONSOR IS MACRO LEVEL, INVESTMENT MANAGER IS MICRO LEVEL) *****8 HAVE TO WORK A LOT OF PROBLEMS..VERY QUANTITATIVE IN NATURE THE ENTIRE PERFORMAN CE SECTION.. LOOK FOR EXAMPLES IN THE WHITE TEXT OF cfa BOOK.2 PAGE EXAMPLE..FIND IT. know returns based vs hold based style analysis..heavily tested previously equit y section information ratio in equity video 2 is not the same as the normal information ra tio about active return..it is a second meaning...Learn BOTH and KNOW when to us e each 2nd meaning IR=IC*sqrt of IB IC is information coefficient, and IB is investor b readth