Risk Management

Risk management may be the most important concept for your portfolio. Topics include the different types of risk, risk management benefits, how to analyze and reduce risk, etc.

Capital Preservation: In a Bear Market, He Who Loses the Least, Wins

Capital Preservation in a Secular Bear Market The long time publisher of the Dow Theory Letters, Richard Russell advises “In a bear market, he who loses least, wins.”  This is an important investing concept that is ignored by most investors. Large investment asset losses can be devastating to a portfolio in a secular bear market. [...]

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AAAMP Blog by Ken Faulkenberry

Ken Faulkenberry earned an MBA from the University of Southern California (USC) Marshall School of Business with an emphasis in investments. Ken has 25 years of investment experience and is dedicated to helping people with self-directed investment management through the Arbor Investment Planner. His asset allocation strategies have an outstanding performance record.

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 Ken Faulkenberry - The Arbor Investment Planner

Risk management investing articles on risk, diversification, asset allocation, preservation of capital, asset correlations, bubbles, hedging, etc.

Cavalcade of Risk #154 – Healthcare Mandate Edition

April 3, 2012

Healthcare Mandate and Risk Transfer I am pleased to host the Cavalcade of Risk, particularly the week after the Supreme Court heard arguments on the healthcare insurance mandate. I love the subject of risk. As an investment portfolio manager I’m usually thinking about investment risk. But I have irritated my family many times with my [...]

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Solutions to Manage Investment Risk and Market Returns

March 18, 2012

Implementing a risk management process is an essential part of successful investment management. The reason most investors have been unsuccessful is because they do not have a risk management process which addresses the risks that sabotage their portfolios. Many investors have employed a simple buy and hold strategy that has destroyed wealth and set back [...]

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Risk management investing articles on risk, diversification, asset allocation, preservation of capital, asset correlations, bubbles, hedging, etc.

Investment Portfolio Diversification Definition, Examples, & Advantages

March 14, 2012

Investment Diversification What is Investment Portfolio Diversification? Investment portfolio diversification is a portfolio strategy combining a variety of assets to reduce the overall risk of an investment portfolio. Portfolio risk consists of two types, systematic risk and unsystematic risk. Systematic risk is the risk associated with market returns. Sources of systematic risk would be macroeconomic [...]

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I Lost 100% of My Investment and I’m Happy I Did!

March 4, 2012

Learn From Your Investment Mistakes It’s important to learn from your investment mistakes; otherwise you will make many more. In college, I had no idea I would be a portfolio manager when I “grew up”. Before my formal investment education I went to the “school of hard knocks” and sometimes it was painful. But I [...]

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Risk management investing articles on risk, diversification, asset allocation, preservation of capital, asset correlations, bubbles, hedging, etc.

Long Term View and Analysis of Risk: How it Affects Your 2012 Asset Allocation

January 16, 2012

2012 Long Term View The beginning of the year is a good time for asset allocation and risk management analysis for 2012. A view of the current long term investment environment is the first step. Long Term View The last 12 years have seen two bubbles; the dot.com bubble, and the housing bubble. Both market [...]

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Definition and Purpose of Portfolio Diversification

January 4, 2012

Definition of Diversification The definition of diversification is the act of, or the result of, achieving variety. In finance and investment planning, diversification is a portfolio strategy combining a variety of assets to reduce the overall risk of an investment portfolio.   Purpose of Portfolio Diversification The purpose of portfolio diversification is portfolio risk management [...]

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Risk management investing articles on risk, diversification, asset allocation, preservation of capital, asset correlations, bubbles, hedging, etc.

How to Minimize Investment Loss with an Asset Allocation Strategy

December 29, 2011

Minimize Investment Loss In our last post, “Probable Maximum Investment Loss and Asset Allocation” , we learned how to tailor our asset allocation to our assumed probable maximum investment loss. Now we can further explore the asset allocation strategy that can successfully maneuver through the volatile times we currently live in. Investment Loss and Asset [...]

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Probable Maximum Investment Loss and Asset Allocation

December 28, 2011

Probable Maximum Investment Loss In our last post How Much of Your Investment Portfolio Can You Afford to Lose?” we looked at the important concept of Breakeven Loss Analysis. Here is the chart we will look at again to facilitate our discussion of Maximum Probable Investment Loss:   Breakeven Loss Analysis Chart                              Gain Required [...]

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Risk management investing articles on risk, diversification, asset allocation, preservation of capital, asset correlations, bubbles, hedging, etc.

How Much of Your Investment Portfolio Can You Afford to Lose?

December 26, 2011

Investment Loss Analysis How much of your investment portfolio can you afford to lose, is one of the most critical questions you should ask yourself when working on your risk management plan. I think most investors have been taught to invest too aggressively.  We will examine why you shouldn’t listen to the industry and media [...]

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