LIII Summary

I went to a 3 day intense seminar (by Schweser) this past weekend. The instructor used 3 slide to summarize the whole LIII material, I find it very interesting and I believe it can serve as a general guide on the exam. 1. Low correlation is good. 2. Returns are non-normal 3. Currency rish should NOT ususally be hedged 4. Weight rebalance cost (trading cost) against benefits 5. Model become invalid when economic process changes. 6. Monitor the process 7. Multi-Factor model is the solution 8. Benchmark has problem and bias. 9. Total return is the key 10. Adjust index for free float 11. Willingness is often lower than ability 12. Return should cover taxes and inflation 13. Time horizon is often long 14. Liquidity needs are often low 15. Sell a single stock holding 16. Take the short term distursement out of asset base. Good luck.

I think that’s all I would remember after a couple of weeks after the exam at best. However, come exam day…how about giving us a breakeven price on a straddle? The summary is entertaining though, thanks for sharing.