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Curriculum·Sophomore·S207

Investing Frameworks (Unleveraged)

The behavior gap, measured annually for three decades. DALBAR's Quantitative Analysis of Investor Behavior estimates, from aggregate fund flows, what the average fund investor actually earns after fees, charges and their own purchases and sales, and compares it with a market index.

Taught in S207-06 ›Source ↗

Start with lesson 16 lessons · about 3.3 hours · 1 lab · free account to read in full

Lesson 1 opens on

Diversification that stopped working without being withdrawn

36 across 2020 to 2021 (the IMF blog, which read the rise as limiting perceived risk diversification benefits), and found the intraday price volatility of bitcoin and ether about four to eight times more correlated with the volatility of the main US equity indices than in 2017 to 2019 (the Global Financial Stability Note). S206-01 treats this as a macro measurement. The construction consequence is this lesson's reading rather than something the IMF measured: an allocation held on the grounds that it reduced portfolio risk would go on being held on those grounds after the property had weakened, because a portfolio's risk is a function of correlations that nobody recomputes and that appear nowhere on a statement.

Read it in S207-01 ›The source ↗

The lessons

  1. S207-01Portfolio constructionSize positions from a stated risk budget rather than from convictionabout 31 min · opens on Diversification that stopped working without being withdrawn
  2. S207-02The drawdown mathCompute the gain required to recover from any drawdown, and read the asymmetry it createsabout 41 min · opens on 1.6 million accounts, 10 October 2025
  3. S207-03Entry and exit frameworksWrite an entry rule that removes timing judgment from the moment of purchaseabout 32 min · opens on Who added and who left, 7 to 9 May 2022
  4. S207-04Time horizon honestyDistinguish an intended horizon from the horizon your obligations actually permitabout 31 min · opens on The decade nobody chose
  5. S207-05Yield without leverageTrace any advertised yield to the party paying it and the risk they are paying you to takeabout 32 min · opens on Stablegains, 2022
  6. S207-06Writing the Investment Policy StatementWrite an Investment Policy Statement containing the eight sections that make it operableabout 31 min · opens on The behavior gap, applied to the reader

Labs

  • S207-L

    The Investment Policy Statement

    Produce a signed, dated IPS. Stored in the platform and surfaced back to the learner every time they later take a simulated action that violates it.