http://wheredoesallmymoneygo.com/dimensional-fund-advisors-part-vii/ A personal finance blog written by Preet Banerjee Wed, 23 May 2012 05:38:46 +0000 hourly 1 http://wordpress.org/?v=3.1.2 http://wheredoesallmymoneygo.com/dimensional-fund-advisors-part-vii/#comment-12139 Dimensional Fund Advisors Part VI | WhereDoesAllMyMoneyGo.com Sun, 18 Mar 2012 03:11:27 +0000 http://www.wheredoesallmymoneygo.com/?p=792#comment-12139 [...] CLICK HERE TO GO TO PART VII [...] [...] CLICK HERE TO GO TO PART VII [...]

]]> http://wheredoesallmymoneygo.com/dimensional-fund-advisors-part-vii/#comment-987 This and That #107 Fri, 29 Aug 2008 02:05:40 +0000 http://www.wheredoesallmymoneygo.com/?p=792#comment-987 [...] continues his DFA series with an explanation of the CAPM theory and a slight problem with [...] [...] continues his DFA series with an explanation of the CAPM theory and a slight problem with [...]

]]> http://wheredoesallmymoneygo.com/dimensional-fund-advisors-part-vii/#comment-986 Preet Tue, 26 Aug 2008 13:39:26 +0000 http://www.wheredoesallmymoneygo.com/?p=792#comment-986 @ Michael James: I'll get into a replacement model in the next few parts in the series. I say "a" replacement because there are other proposed models as well intended to replace CAPM. For the most part, CAPM's reliance on a single risk factor (the market factor) has been it's biggest hurdle I think - the newer models (which are still just models themselves) focus on more factors and seem to have a statistically significant increase in explanatory power for different portfolios (which I will also discuss). At a time when there was no real theories, CAPM was a giant leap - but it's too simple and doesn't hold up well enough when you start to dissect the market returns in different ways. That's not to say the new models can't be improved or are perfect - again they are just models too. @ Michael James: I’ll get into a replacement model in the next few parts in the series. I say “a” replacement because there are other proposed models as well intended to replace CAPM. For the most part, CAPM’s reliance on a single risk factor (the market factor) has been it’s biggest hurdle I think – the newer models (which are still just models themselves) focus on more factors and seem to have a statistically significant increase in explanatory power for different portfolios (which I will also discuss). At a time when there was no real theories, CAPM was a giant leap – but it’s too simple and doesn’t hold up well enough when you start to dissect the market returns in different ways. That’s not to say the new models can’t be improved or are perfect – again they are just models too.

]]> http://wheredoesallmymoneygo.com/dimensional-fund-advisors-part-vii/#comment-985 Michael James Tue, 26 Aug 2008 04:05:32 +0000 http://www.wheredoesallmymoneygo.com/?p=792#comment-985 I'm aware that CAPM definitely has its deficiencies. I've been critical of it myself. What do you mean when you say that it has been all but invalidated? I’m aware that CAPM definitely has its deficiencies. I’ve been critical of it myself. What do you mean when you say that it has been all but invalidated?

]]> http://wheredoesallmymoneygo.com/dimensional-fund-advisors-part-vii/#comment-984 Dill Tue, 26 Aug 2008 02:44:54 +0000 http://www.wheredoesallmymoneygo.com/?p=792#comment-984 You should be a professor of finance with the way you can boil down concepts so clearly and plainly. I've always been too intimidated to read up on CAPM, but after reading this and then checking the other sources that I was scared to get into, they make so much sense now. Thanks Preet! You should be a professor of finance with the way you can boil down concepts so clearly and plainly. I’ve always been too intimidated to read up on CAPM, but after reading this and then checking the other sources that I was scared to get into, they make so much sense now. Thanks Preet!

]]> http://wheredoesallmymoneygo.com/dimensional-fund-advisors-part-vii/#comment-983 Dimensional Fund Advisors Part VI : WhereDoesAllMyMoneyGo.com Tue, 26 Aug 2008 00:23:28 +0000 http://www.wheredoesallmymoneygo.com/?p=792#comment-983 [...] CLICK HERE TO GO TO PART VII [...] [...] CLICK HERE TO GO TO PART VII [...]

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