NEW YORK, April 10, 2012 /PRNewswire/ -- Credit Suisse's Asset Management division announced the release of a new white paper titled "New Normal Investing: Is the (Fat) Tail Wagging Your Portfolio?". Authored by Yogi Thambiah and Nicolo' Foscari, both from the Investment Strategy Americas CIO Office, the paper addresses how investors can adjust risk frameworks to deal with a "New Normal" environment of increasing volatility and low-yielding assets.
The paper—the latest of several recent publications by the authors on the investing challenges in the new-normal environment—focuses primarily on risk-management techniques designed to better incorporate fat-tail risks and potentially minimize portfolio losses.
The paper's highlights and conclusions include:
- In the new normal, fluctuations in risk appetite will be more frequent and portfolio returns will be increasingly derived from the tails;
- As traditional measures of risk based on mean-variance optimization have failed to fully characterize return behavior, incorporating higher moments (i.e., skew and kurtosis) of a return distribution have become increasingly important; and
- Shifting the risk-management framework to accommodate fat-tail events can minimize potential portfolio drawdowns and help protect assets against extremely negative returns.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV