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This is a question for the US Congress.
What else is diversification for but to reduce possible drawdown (risk)?
This is 7th grade school.
Why else would you need diversification if not to reduce possible drawdown (risk)?
This is 7th grade school.
To limit risk, yes.
But to reduce possible drawdown, no.
Diversification has no effect on drawdown.
To limit risk, yes.
But to reduce possible drawdown, no.
Diversification has no effect on drawdown.
(in the kind voice of Chef Barinov)
-Dima, the main thing is not to worry. Otherwise your brain may burst. Or you'll get sick.
(in the kind voice of Chef Barinov)
-Dima, the main thing is not to worry. Otherwise your brain will burst. Or you'll get sick.
)
Don't disgrace the faculty.
To limit risk, yes.
But to reduce possible drawdown, no.
Diversification has no effect on drawdown.
Dimitri, you seem totally inadequate to trading.
Even Wikipedia says that drawdown and risk are the same thing, that drawdown is a measure of risk:
https://en.wikipedia.org/wiki/Drawdown_(economics)
"In finance, the use of the maximum drawdown as an indicator of risk is particularly popular in the world of commodity trading advisors.........."
and there are lots of other links at the end of the article about this.
Also:
http://www.investopedia.com/terms/d/drawdown.asp
http://mutualfunds.com/education/drawdown-risk-introduction/
and so on.....
Do you have a school leaving certificate? I am not asking about a diploma.
Portfolio diversification and the drawdown of open positions are different things.
I gave an example for children - portfolio diversification is done and the portfolio is drained.
All the Pension Funds in the US meet the diversification requirements and still go bankrupt.
Not even funny anymore..... I already gave him an example on my fingers and he gave me wikipedia.
Open a terminal, open a position on one pair and drain it.
Then open a position on 20 pairs and also drain it.
What is the difference in the loss? The difference is that in the second case it was a diversified portfolio.
Portfolio diversification and the drawdown of open positions are different things.
I gave an example for children - portfolio diversification is done and the portfolio is drained.
All the Pension Funds in the US meet the diversification requirements and still go bankrupt.
Not even funny anymore..... I already gave him like an example on my fingers and he gave me wikipedia.
Dimitri, you have one sentence on the same page fundamentally contradicting the other. You yourself have just written that diversification is a MUST to limit risk. So answer yourself (and us) how in your example diversification proved to be "necessary" and "limited" the risk.
Where is your logic?
Your thoughts are related in roughly the same way as "It was raining and two students".