Introduction
Investing can be a challenging and intimidating endeavor, even for those with a wealth of experience in the field. One tool that can be particularly useful in navigating the complex world of investing is Modern Portfolio Theory (MPT). MPT provides an approach for helping investors make informed decisions about their investments, taking into account a variety of factors such as risk and return. In this post, we will delve into the details of MPT, examining its underlying principles and exploring how it can be applied in real-world investing situations. Additionally, we will discuss the importance of MPT in the world of investing and how it can be used as a valuable tool for investors of all levels.
What is Modern Portfolio Theory?
Modern Portfolio Theory (MPT) is a widely used investment strategy that aims to maximize expected portfolio return for a given level of risk. Developed by economist Harry Markowitz in 1952, MPT is a mathematical model that helps investors understand how to balance risk and reward when constructing a portfolio.
One of the key principles of MPT is the concept of diversification. By investing in a variety of different asset classes, an investor can reduce the overall risk of their portfolio without sacrificing expected return. This is achieved by spreading investments across different asset classes, such as stocks, bonds, and cash, which tend to have low or negative correlations with one another. This means that when one asset class performs poorly, the other asset classes may provide some level of compensation, helping to mitigate the overall impact on the portfolio.
In addition to considering diversification, MPT also takes into account the correlation between different asset classes and how it affects the risk of the overall portfolio. By understanding the relationship between assets, investors can make informed decisions about which assets to include in their portfolio and how to allocate their investments.
Overall, Modern Portfolio Theory is a valuable tool for investors looking to make informed decisions about their investments and manage risk effectively. It has been widely adopted by investors and finance professionals and continues to be an important concept in the world of investing.
How Does Modern Portfolio Theory Work?
At its core, MPT seeks to maximize the expected return of a portfolio for an acceptable level of risk. To implement MPT, investors first need to determine their investment goals, including their desired level of risk and return. They can then use MPT to construct a portfolio that is optimized to meet these goals. This typically involves analyzing the expected return, risk, and correlation of different assets and selecting a combination of assets that is expected to achieve the desired level of return for a given level of risk.
Why is Modern Portfolio Theory Important in Investing?
MPT is important in investing because it provides a framework for investors to make informed decisions about their investments. By understanding the risk and expected return of a portfolio, investors can make more informed decisions about how to invest their money.
MPT also helps investors understand how different assets can be combined to create portfolios with the desired risk and expected return. By diversifying their portfolios, investors can potentially reduce the risk of their overall portfolio to align with their risk tolerance.
Conclusion
It is important to be honest with yourself on how comfortable you are with portfolio volatility and then use an investment strategy that fits accordingly. Modern Portfolio Theory is an important tool for investors to understand and can be effective in helping investors achieve their goals when properly paired with a financial plan and overall investment strategy.
Have a great weekend!
Source: Ballentine Capital Advisors
Golf Tip of the Week
10 Tips To Help Golfers Lose 10 lbs (Or More!) In 2023
A few years ago, I made a New Year’s resolution I was determined to keep. After seeing the number on the scale creep slowly upwards, and the waistline on my trousers grow ever-tighter, I decided I was going to lose some weight.
So, I signed up for Weight Watchers and interviewed their experts along with some of the sharpest minds on tour who went through their own, similar experiences.
It wasn’t easy, but 40 pounds and a few years later, I feel great. A lot of people come into 2023 with similar resolutions, and sometimes they’ll ask me what I learned along the way.
What I say in response is that the process of losing weight is relatively simple: If you create a calorie deficit, which means you’re burning more calories than you’re eating, you’ll lose weight. You have to eat the right calories, for sure, but for me, the really hard part came in changing my behavior—from building new habits to becoming disciplined enough to stick to them and keep yourself motivated.
Playing golf really helped with all those things. Done right, the game you play for fun can be a useful tool for making your feel and look better off the course. It may even help you play better on it, too.
So, if you want to lose weight, here are a few ways to make your new resolution stick—and use golf to help you do it.
Establish your ‘why’
This is a big part of the Weight Watchers program. It’s essentially no different setting a goal for yourself, like you’d do with your game. Why do you want to lose weight? Remind yourself of that often and it can help keep you grounded.
Budget your carbs
There are no bad foods, and that includes carbs. Just remember the purpose carbs serve: Your body burns through them quickly when it needs them for short-term energy. That’s what makes them great before a round of golf or a range session. But if you’re eating lots of carbs without doing much, you’ll be stuck in a cycle of feeling hungry and eating more, faster than your body can burn them off. Budget them accordingly.
Eat more protein
One of the reasons why Weight Watchers incentivizes people towards more protein is because it gives you a more sustained energy source that keeps you feeling full longer. The best diet is a balanced one, but when in doubt, you can’t go wrong with lean proteins like chicken or turkey breast.
Plan ahead
A bit like going to the range with a game plan of what you’re going to practice, spend a little bit of time at the end of each day to plot your meals for the following day. Changing what you eat, more than anything else, requires building a new set of good habits. If you’re going to have a carby breakfast, what are you going to eat for lunch? Or dinner? What kind of fruit are you going to eat along the way? A little planning ahead, especially in the early days, can go a long way in keeping you on track.
Don’t let yourself get too hungry
If you’re like me, when you don’t plan out what you’re going to eat for the day ahead of time, you’ll invariably end up hungry. And that’s the worst time to start thinking about food. When you’re hungry, your brain and body will naturally start craving fattier, higher-calorie foods. Keeping a conveyor belt of healthy fruit and high-protein snacks during those long stretches between meals (like when you’re on the golf course) will stop your cravings from leading you into making bad decisions. Simply put, it’s really hard to build healthy habits on an empty stomach.
Weigh out your food
It may sound excessive, but this truly was a game changer for me. If you’re gaining weight and not sure why—or rather, you’ve made some dietary changes and still aren’t seeing the pounds come off—you may simply be eating way more than you think. Weighing out carbs like pasta, and seeing how they compare to the serving size, was an eye-opening experience.
Look for easy upgrades
Not every change you make to get healthier has to be a big one. Sometimes, it’s the smaller ones that can work the hardest for you. So look for those easy upgrades: Rather than reaching for a sugary sports drink on the course, try a water instead. If you usually take a cart, try working in a round with a push cart every now and again.
One bad hole doesn’t make a bad round
When you’re trying to change your eating habits, you won’t always succeed. You’ll get hungry and cave. You’ll be in a social setting with friends and decide to order dessert, or keep reaching for that delicious appetizer somebody brought to the party. Not if but when this happens, don’t be too hard on yourself. Remember not to lose sight of the goal and don’t let one bad day destroy all your hard work. It’s not about what happened, it’s about what happens next.
Keep score
There are definitely real and serious drawbacks to being too laser-focused on the number the scale says, but if you’re serious about getting healthier and losing weight, you need to be honest about where you are. Weigh yourself on a regular schedule: Whether it be daily, weekly, bi-weekly or monthly, make your weigh-ins routine and mandatory. Just as tracking your golf stats can highlight the areas of your game where you most need to improve, tracking your weight will do the same with your body.
Focus on the process, not the immediate results
If your goal is losing weight, some days will feel easier than others. You may not see immediate results either, or even if you are proud of shedding a few pounds, those around you may not give you the kind of positive feedback you may be craving. It’s important to remember during these times that getting healthy and losing weight really is about playing the long game.
Tip adapted from golfdigest.comi
Recipe of the Week
Sweet And Sour Couscous-Stuffed Peppers
4 Servings
Ingredients
- 2 medium carrots, cut into chunks
- 2 stalks celery, cut into chunks
- 1 large shallot, cut into chunks
- 1 1/2 tablespoons olive oil
- 1/2-pound lean ground beef
- 2 tablespoons plus 4 teaspoons tomato paste
- 1/3 cup chopped fresh parsley, dill, or a combination
- 1/3 cup golden raisins
- 2 tablespoons red wine vinegar
- Kosher salt
- 4 red, yellow, orange, or green bell peppers or a mix of colors, halved lengthwise and seeded
- 1/2 cup whole wheat couscous
- 3/4 cup grated asiago cheese
Instructions
- Preheat the oven to 450 degrees F. Pulse the carrots, celery, and shallots in a food processor until coarsely chopped.
- Heat 1 tablespoon of the olive oil in a large nonstick skillet over medium high. Add the chopped vegetables and cook, stirring frequently, until light golden and soft, 8 to 10 minutes. (Add a splash of water if the mixture begins to stick.) Add the ground beef and 4 teaspoons of the tomato paste and cook, breaking the mixture up with a wooden spoon, until browned, about 4 minutes. Add 1/2 cup water, the parsley, raisins, 1 tablespoon of the vinegar and 3/4 teaspoon salt. Bring to a simmer and cook until most of the water is absorbed and the mixture gets saucy, about 1 minute. Let cool slightly.
- Meanwhile, toss the pepper halves with the remaining 1/2 tablespoon oil in a microwave-safe bowl. Cover with plastic wrap and microwave until the peppers are pliable, 10 to 12 minutes. Carefully uncover the bowl and pour out any liquid that has accumulated.
- Stir the couscous into the beef mixture. Whisk together the remaining 2 tablespoons tomato paste, 1 tablespoon vinegar and 3/4 cup water in the bottom of a large baking dish.
- Carefully transfer the peppers to the baking dish cut-side up and fill each pepper with the couscous mixture. Sprinkle with the cheese. Cover with foil and bake until the peppers are tender, and the stuffing is hot, 20 to 25 minutes. Serve warm or at room temperature drizzled with the tomato cooking liquid.
Recipe adapted from foodnetwork.comii
Health Tip of the Week
Health and Beauty Uses For Baking Soda
Not Just for Your Kitchen
You may know it as the orange box that lurks in the back of your fridge to take out bad smells. Or as a pantry staple that helps your baked goods rise. But baking soda, aka sodium bicarbonate, deserves a spot in your medicine cabinet, too. Here’s how it helps keep your body healthy and clean.
Green Teeth Cleaner
Baking soda works great to physically remove plaque, the sticky film of bacteria in your mouth. Over time, a plaque buildup hardens into tartar and can lead to gum disease. Dip a wet toothbrush into the powder and brush as usual. It doesn’t have the fluoride you need to protect against tooth decay and cavities. Many public water supplies have added fluoride. Even so, brush with regular toothpaste as well to be safe.
Inexpensive Mouthwash
That garlic aioli pasta was delish. But now your breath is keeping even your dog away. Swish a teaspoon of baking soda in a half glass of water and rinse your mouth. It doesn’t merely mask the smell with a minty scent like most mouthwashes do. Baking soda actually banishes the odor altogether.
Body Deodorant
Most things that stink have acidic or basic odor molecules. Baking soda brings them to a more neutral, odor-free state. No wonder sewage plants and feedlots use the stuff. It also works on your body odor. Dust a little under your arms in the morning. If you don’t care for the powdery residue on your clothes, use stick deodorants that have baking soda. Look for ones that list sodium bicarbonate as a main ingredient.
Helps Your Kidneys
These organs remove waste and extra water from your body. If you have chronic kidney disease from diabetes, high blood pressure, or other causes, acid can build up in your body. Sodium bicarbonate can bring the acid levels down and may help slow bone loss and build muscles. It’s important to work closely with your doctor if you want to try this. Scientists are still figuring out exactly when and how this works.
Helps Fight Cancer
Emergency rooms and hospitals stock sodium bicarbonate as a treatment for cardiac arrests, poisoning, and other cases. It also helps to counteract the acidic properties of chemotherapy medication for cancer. Some studies show that lower acid levels may slow certain tumors from growing and spreading.
Soothes Your Skin
Bitten by a mosquito? Brushed up against poison ivy? Baking soda to the rescue. It can relieve minor irritation, pain, itching, and redness. Mix up a paste of 3 parts baking soda to 1 part water. Smear it on your skin and leave for 20 minutes before you wash it off. Or soak in a bath with a half-cup of baking soda added to the water.
Eases Pain
Sodium bicarbonate may boost the pain-killing powers of lidocaine used in epidurals. Researchers are studying whether it might help ease pain from cancer. If you’re hurting from sunburn, soak a washcloth in a solution of about 4 tablespoons of baking soda per quart of water. Gently dab it on the affected areas to soothe your skin. It can help for other minor burns as well, including windburn.
Tamp Down Acid Reflux
Sodium bicarbonate helps fight the extra acid that might rise from your stomach up to your throat and even your mouth after you eat. You can buy it over-the-counter as a chewable tablet. Or drink your own homemade antacid by mixing a half-teaspoon of baking soda in 1/2 cup of water. Talk to a doctor before you give it to kids under 6, or if you start to use it regularly along with other medication.
Facial Scrub
Baking soda is mildly abrasive. Use it as a gentle face cleanser. First, wash your face with a mild, non-abrasive cleanser and rinse with water. Then, make a paste of 3 parts baking soda to 1 part water. Rub it in carefully in circles for a deep clean. Rinse with water.
Clarify Your Hair
Mix a teaspoon of baking soda with your favorite shampoo to remove buildup from sprays, gels, conditioners, and other products. Your hair won’t just be cleaner, it may become easier to style, too.
Soften Your Skin
Add a half-cup of baking soda to your bathwater. It will neutralize acids, wash away sweat and oil, and leave your skin silky smooth. Bonus: After you dry off, you can use a bit more of the stuff to scour the tub clean!
Clean Your Child’s Toys
You can use baking soda instead of harsh chemicals to get grime off your baby’s tray, highchair, and toys. Remember that it doesn’t kill germs. But you can pair it with vinegar, which works as a disinfectant. Be sure to rinse well.
Freshen Dentures
Dissolve 2 teaspoons of baking soda into a cup of warm water. Then just soak your dentures to loosen food, get rid of odors, and freshen any lingering bad taste. It also works for retainers and mouth guards. For a more thorough job, clean them with some bicarbonate and a toothbrush.
Tip adapted from webmd.comiii
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Ballentine Capital Advisors is a registered investment advisor. The advisory services of Ballentine Capital Advisors are not made available in any jurisdiction in which Ballentine Capital Advisors is not registered or is otherwise exempt from registration.
Please review Ballentine Capital Advisors Disclosure Brochure for a complete explanation of fees. Investing involves risks. Investments are not guaranteed and may lose value.
This material is prepared by Ballentine Capital Advisors for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation or any particular security, strategy, or investment product.
No representation is being made that any account will or is likely to achieve future profits or losses similar to those shown. You should not assume that investment decisions we make in the future will be profitable or equal the investment performance of the past. Past performance does not indicate future results.
Advisory services through Ballentine Capital Advisors, Inc.
i https://www.golfdigest.com/story/golfer-weight-loss-tips-2023
ii https://www.foodnetwork.com/recipes/food-network-kitchen/sweet-and-sour-couscous-stuffed-peppers-recipe-2121036
iii https://www.webmd.com/beauty/ss/slideshow-beauty-baking-soda-health
