- R 3.1.0 (codename “Spring Dance“) is released this week!
- Do you invest in the stock market? If so, you may know the so-called 60/40 rule (invest 40% in bonds and 60% in stocks). But do you really believe this strategy? Eran Raviv performs some simulation studies and tries to verify whether the 60/40 rule is a wise choice or simply a myth.
- Popular R articles of the week: “Pretty” table columns and Calculating confidence intervals for proportions by Alan Haynes (Insights of a PhD student), Interpreting interaction coefficient in R by Lionel H. (biologyforfun) and Extract CSV data from PDF files with Tabula by Nathan Yau (Flowingdata).
- And finally, the most loyal fans in the NBA are…
Concerning the 60/40 rule of investmenting, would it be possible to write some code in with R~studio to approximate the utility of investing in gold or bitcoins?
I think the 60/40 rule of investing are the limits to which one can ivest in gold and the bitcoin.
I think given that investors are rational, the rule would on set limits to maximization of profits. The rule says you should have 60% of your portfolio in stocks and 40% in bonds. It is typically referred to as a”balanced” allocation and is designed to offer you protection in times of market volatility. You’re essentially using your stake in bonds as a hedge against the ups and downs of the stock market. Which implies that you are not maximising profit, just playing safe.