Author: Tim Norton

Recently I saw an article about Monte Carlo Analysis, which (as you know) is a way to evaluate a person’s ability to meet their future income needs. Using a portfolio of securities or asset allocations it runs through as many rolling periods as available in the data, to come up with a probability of meeting future income needs. Certainly Monte Carlo Analysis is not great...

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It's commonly known in the industry that passive investing keeps growing and active investing is under pressure from all sides. First there are fees. For a decade or more, books have been written about the impact of fees on portfolios. The late John Bogle was one of the pioneers and thought leaders here. Second, performance reports showing passive funds beating active managers hit the investment...

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You may have heard of Markowitz’s Critical Line Algorithm, or CLA. CLA was Markowitz’s attempt to solve the problem of portfolio optimization using quadratic math. For a couple reasons is was an ingenious invention. But it also has its problems. The problem with CLA is that it demonstrates large changes in the portfolio with small changes in the forecasted returns of assets. This is a big problem...

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I know, "data flow" sounds a little pretentious, and what the heck does it mean? The core of your business works between several key applications: a financial planning application, a portfolio management system, of course a CRM, and maybe one or two others.  So what happens is client data needs to go from one thing to the next. For most advisors, this leads to multiple efforts to...

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