Investing and portfolio optimization guides

Key concepts to understand the optimizer: the Sharpe ratio, the efficient frontier, Monte Carlo simulation, and how to build an S&P 500 portfolio.

• What Is the Sharpe Ratio and How to Read It
  The Sharpe ratio measures excess return per unit of risk. What it is, how it is calculated, and how to interpret it, with examples.
• The Markowitz Efficient Frontier Explained
  What the efficient frontier is, Markowitz portfolio theory, and how it helps you choose the best risk-return combination.
• Monte Carlo Simulation Applied to Portfolios
  How Monte Carlo simulation is used to explore thousands of portfolios and find optimal risk-return combinations.
• How to Optimize an S&P 500 Portfolio, Step by Step
  A practical guide to building and optimizing a portfolio of S&P 500 stocks using Sharpe, the efficient frontier and Monte Carlo. Free.
• What Is the Sortino Ratio and How Does It Differ From Sharpe
  The Sortino ratio improves on Sharpe by penalizing only downside moves, not upside volatility. How it is calculated, how to read it and when to use it.
• What Is CVaR (Expected Shortfall) and How It Measures Tail Risk
  CVaR measures the average loss in the worst-case scenarios. More complete than VaR for assessing a portfolio's tail risk.
• How to Efficiently Diversify a Stock Portfolio
  Diversifying isn't just holding more stocks. A practical guide to correlations, GICS sectors, and diversified S&P 500 portfolios.
• What Is Max Drawdown and How to Interpret It in a Portfolio
  Max drawdown measures the worst decline from a historical peak. What levels are acceptable, and why it's the easiest risk metric to understand.
• Survivorship Bias in the S&P 500: What It Is and Why It Matters
  The S&P 500 only includes companies that survived. This bias inflates historical returns and can lead to unrealistic expectations.
• What Is Stock Volatility and How It Affects Your Portfolio
  Volatility measures the dispersion of returns. Why high volatility doesn't always mean more risk, and how to use it to build portfolios.