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Invest with the Fed: Maximizing Portfolio Performance by Following Federal Reserve Policy by Luis Garcia-Feijoo, Gerald R. Jensen, Robert R. Johnson

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CHAPTER 9

INVESTMENT STRATEGIES

To reduce risk it is necessary to avoid a portfolio whose securities are all highly correlated with each other. One hundred securities whose returns rise and fall in near unison afford little more protection than the uncertain return of a single security.

Harry Markowitz, recipient of the 1990 Nobel Prize in economics1

In this chapter we combine the material presented in previous chapters to consider alternative comprehensive investment strategies. As you might expect, each of these comprehensive strategies is predicated on shifts in Fed monetary policy. Specifically, monetary conditions serve as the basis for determining the appropriate portfolio composition and identifying the appropriate timing for a shift in ...

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