Applied Portfolio Management - Class 1 - Risk & Return

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Book Suggestions:

Burton Malkiel, A Random Walk Down Wall Street (2007)
Roger Lowenstein, Buffett: The Making of an American Capitalist (2008)
Jack Schwager, Market Wizards Series
Jack Schwager, Market Sense And Nonsense (2013)
Nassim Nicholas Taleb, Fooled By Randomness (2007)
Victor Niederhoffer, Education of a Speculator (1998)
Victor Niederhoffer, Practical Speculation (2004)
Dimson, E., Marsh, P., and M. Staunton, Triumph of the Optimists: 101 Years of Global Investment Returns (2002)
Roger Lowenstein, When Genius Failed (2001)
Ivan Boesky, Merger Mania (1985)
Howard Marks, The Most Important Thing (2011)
Frank Partnoy, F.I.A.S.C.O. (1999)
Michael Lewis, Liars Poker (1989) - The Big Short (2010)
Gregory Zuckerman, The Man Who Solved the Market (2019)

Patricks' Books:
Statistics for Traders:
Financial Derivatives:
Corporate Finance:

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Risk & Return in Finance.
The higher the risk taken, the more greater the expected return should be, and conversely, the lower the risk, the more modest the expected return. In this class we learn about how traders and portfolio managers think about risk and return. We learn about indifference curves, diversification and the importance of correlation in building a portfolio. We learn about sharpe ratio, sortino ratio and beta.


Often people are confused by the idea of the risk return tradeoff. They think that taking a higher risk means that you are guaranteed a higher return. Of course, if this was the case, risk would not be risky. In finance what the risk return tradeoff is referring to is the idea that an investor would only agree to take greater risk, if they believed that the positive outcomes were greater than the positive outcomes achieved for low risk investments.