BLUE GLOBE

HANDS ON INTRODUCTION

We cannot predict the future but we can learn from the past and take action on present by adopting the right approach and processes.

Investment world is vast and for most people quite intimidating. We have put together some educational material that should allow you to have a better grasp of some key financial concepts. This material is presented through a serie of interactive tools (mostly graphs) along with accompanying text that will indicate how to modify some variables and stress out important observations that should be made. Accompanying text has been categorized in 3 different groups based on its complexity Level1Level2Level3. Also we suggest that you follow the sequence in which the material is presented by using the navigation button LeftUpRight. For example it is important to understand risk/standard variation concepts before going to the diversification/correlation.

We had no choice but to concentrate on a few concepts. We will address the foundations of asset allocation including historical performance, the benefits and limitations of diversification. Understand mean-variance optimization and how to derive the efficient frontier.
First we will introduce some basic concepts such as asset class, return distribution, compounded annual growth rate, we will show you how risk can be quantified and how its effects are measured, then explain why diversification helps to reduce risk and finally present you the efficient frontier concept and how it can be applied to allocate asset. All those concepts are part of the modern portfolio theory.


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