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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: Mr. BSL who wrote (12364)2/24/2001 2:20:35 PM
From: Gary D  Read Replies (1) of 42834
 
Mr. BSL, re: "If it wasn't for the 60/40 foolishness"

You sound like a pretty binary guy. <g> Here's a test: what if a hypothetical 'model' you believed in suggested the following scenario for a certain time frame:

1) 50% upside; 1/3 probability
2) No change; 1/3 probability
3) 25% Downside; 1/3 probability

Even though the chances are 2:1 in favor of no losses, would you still be 100% invested even with a 1/3 risk of loosing 25%? Would it be foolish for someone to whom a 25% loss is unacceptable to be 50% in cash, and still hoping the market goes up 50% for a 25% net upside to the portfolio?

My apologies to those here who are nauseated when any probabilities other than 100% or 0% are discussed. <g>

Gary
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