Defining goals and constraints
There are many ways to use the previous strategies in real portfolios. A simple one is to combine two or more strategies. The best solution depends on each investor’s goals and constraints, expressed in terms of:
- frequency and time available for portfolio management,
- capital invested,
- appetite for risk,
- aversion to market-timing or hedging,
- aversion or attraction to specific sectors,
- potential to trade in a margin account,
- economic data and personal opinions on sectors,
- other assets and incomes correlated with specific sectors.
This chapter shows two examples adapted to different situations.