<!-- /* Font Definitions */ @font-face {font-family:"MS Mincho"; panose-1:2 2 6 9 4 2 5 8 3 4; mso-font-alt:"ＭＳ 明朝"; mso-font-charset:128; mso-generic-font-family:modern; mso-font-pitch:fixed; mso-font-signature:-1610612033 1757936891 16 0 131231 0;} @font-face {font-family:"\@MS Mincho"; panose-1:2 2 6 9 4 2 5 8 3 4; mso-font-charset:128; mso-generic-font-family:modern; mso-font-pitch:fixed; mso-font-signature:-1610612033 1757936891 16 0 131231 0;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:""; margin:0in; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:"Times New Roman"; mso-fareast-font-family:"MS Mincho";} @page Section1 {size:8.5in 11.0in; margin:1.0in 1.25in 1.0in 1.25in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.Section1 {page:Section1;} -->Successful investing is more than just picking the right stock. It is not just about timing the market. It requires two essential ingredients. The first ingredient is having a winning edge. The author’s motto is: In order to beat the market, you need an edge. Never let your money leave home without it. However, that is not enough. Even if one has a winning edge, it is entirely possible to invest too recklessly or too conservatively and not achieve your objectives. Even with a winning system, excessive position sizes can destroy a trade just as surely as lack of an edge. Failure to take adequate risks can also lead to underperformance. The purpose of this book is to show how to achieve the right balance of position sizing and risk management so as to achieve the investment goals. Many books have covered how to have a winning edge. That is not the purview of this work. Rather, this book focuses on the relatively unexplored realm of money management and portfolio modeling. Managing a portfolio through position sizing is at least as important as finding and maintaining an investment edge. Optimal Portfolio Modeling provides an introduction to the statistical properties of markets in the early chapters. The book is oriented to intelligent people who may not be full time rocket scientists. The author resisted the very strong temptation to title this work Rocket Science for Average Folks. Instead, the seemingly more dignified title was chosen. Nevertheless, this work is designed to be very accessible to all, even with a limited math background. Only high school algebra is required to understand this book. Readers with an advanced technical degree may be astonished to find that calculus is not required. They may argue that optimization requires the use of calculus. This is true. However, Excel knows how to do the calculus and so does the statistical language R. Users do not need to know the math in order to understand the result. Only basic high school algebra is required. These tools know how to do the magic. The user merely needs to know how to invoke the magic spell and how to interpret the results. This book assumes the reader has some beginner level of knowledge of Excel. The text fully explains how to use the built-in Solver, which allows the user to optimize models.