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Minimizing volatility is important to investment managers focused on capital preservation. After all, lower volatility helps protect capital and improve the key portfolio performance metric, the Sharpe Ratio, which is equal to the average annualized return divided by annualized volatility. An acceptable Sharpe Ratio for a portfolio starts in the 1.8 range. Some high-frequency trading funds produce Sharpe as high as 20. Even very small positive returns can produce large Sharpe ratios that attract investors, but only if the volatility of the portfolio is tiny. Minimizing volatility is a challenging task. In a nutshell, to minimize volatility, one needs to: 1. Identify the conditions thatRead More →

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The first iPhone was launched on June 29, 2007, and the world has never been the same since. The speed and convenience with which we now communicate created the new levels of urgency, including the urgency to understand and participate in further unbridled innovation. Since the launch of the iPhone, many companies have adopted the so-called Digital One company strategy with the idea to integrate social media, mobile technology, fast analytics and cloud data storage. Social media alone creates change and not just because of all the new tools connecting billions of individuals worldwide. People use social networks to gain immediate access to information thatRead More →

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In the last year or so, stock prices have been moving drastically up and down, a phenomenon known as market volatility. The latest research from AbleMarkets shows that investors can help reduce intraday volatility by collectively expressing their opinions about a stock’s imminent direction on social media. By speaking up online, investors appear to speed up the formation of market consensus and the resulting price adjustment, minimizing price volatility in the process. Social media continuously updates our collective knowledge of financial markets. Investors posting their thoughts online and experiences with a particular publicly-traded firm may encourage others to consider investing into the stock of thatRead More →