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Be Wary of Crowd Funding Start-Ups

To construct an optimal portfolio for any investor requires knowledge of two quite different types.

Most obviously, we need to have some knowledge of investments: What is the expected risk and return of all the assets we could use to build the portfolio, and to what degree are they likely to rise or fall together? Secondly, if we are to succeed in combining these into optimal portfolios, we need to understand investors: In particular, we need to know exactly what trade-offs between risk and return each investor is prepared to make. Without this knowledge we may well design a portfolio that is optimal … but optimal for whom?

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