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Author: AnandaVaR Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 46842  
Subject: Re: Merck and the Value of Half Date: 10/8/2004 5:38 PM
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Jacko2 -

I don't think I stressed diversification in my post, but you were right in figuring that out from my text that I suggested it. I do know that there are methods such as Value-at-Risk (VaR) currently being used by many hedge funds to determine exactly what part of their portfolios are really subject to possible loss. The problem with VaR is that it is so dependent on % in losses and a time frame - hence making it difficult to compare.

Did your Lichello bands pan out for any return? I've heard that since Lichello wrote his book, people have modified the method to cap the amount of cash cushion so that more money stays in the market (this was good during the 90's, not so sure in 2001+)

I'm still not sure if there are any investment methods other than straight hedges that would handle dramatic drops such as MRK. Minimizing risk has been such a hot topic for investors lately, but as you suggested, there are many types of risk from specific risk to policy risk. This fits with exactly what you mentioned - we don't know the future (and if we did, only the fastest traders could make money on the market)

AnandaVar
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