Mike,
Good questions.
Risk, as in MPT, is always a relative term. The benchmark, of course, is the vague term called market, which mean different things to different folks depending on individual access (for example, a resident Indian investor cannot invest in the S&P due to legal issues and one probably has to use the Sensex instead in their case).
As for temporal comparisons like the one you raised, that's an excellent question and frankly I do not have the answer. I will try to find it out.
As for P/Es, since MPT doesn't comment on absolute valuations, it will ignore the market P/E in an absolute sense.
As for the risk of over-owning any individual security, MPT being a portfolio theory will offer no guidance at all. BTW, how do you define over-owning?
-BGR. |
