Talk:Financial Portfolio Optimization Methods

Latest revision as of 14:24, 29 September 2015

Josef: Thank you for an interesting, and already rather detailed, Wiki article.

What I struggle with is the relationship of your article with the management of project portfolios. There are in fact serious limitations to the applicability of financial portfolio theory to project portfolios, for example the assumptions that you can invest/divest into options without changing their risk/return balance, or the assumption that you can actually divest from options ("selling" a failing project will almost always be impossible, as I am not aware of a secondary market for projects). I am not sure how we can "salvage" all the details you have already produced. What I would suggest is to focus on what part of financial portfolio management theory is applicable to project portfolio management, or better, why it is not applicable.

[edit] Reviewer 1 – User: s141938

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• Methods are really thoroughly described. Nothing is left out. I am wondering if you could specify which ones are popular and which ones have been left out*
• When you’re describing the formulas, you describe also the meaning of the variables. Perfect! But some have been left out like in CVar and semi-variance - the z and T and r
• I like the application part at the end of the article, showing where this optimization is still in use. But then again, could you give more details about which method is more popular
• References are as they should be : quick description, well formatted, good sources
• Links to other articles. Keep it that way
• see also section is nice

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• You could write a quick abstract at the beginning to give a general overview of the article:Fixed it
• Like I have already mentioned check all of the variables in each formulas (CVar, semi-variance - the z and T and r, ):Fixed it
• I was a bit confused by the usage of different words sometimes. For instance in the mean variance method you are talking about bonds, then in other methods it’s about portfolios. I think that you could explain the key concepts more thoroughly in the first block and make it a separate paragraph, so that it is easy to spot when going through the article quickly:Bonds was changed into assets, recheck the term in every model. You'll see that this refers to each asset of a portfolio
• Try to structure things a bit. For instance separate the first block into „Introduction" and "main concepts and principles"
• Elaborate the idea of financial portfolio, unless there is nothing more to add:Nothing more to add,you can check the reference
• Divide the text into paragraphs -> might be easier to read or at least scan
• Could you be a bit more precise about the assumptions - who made them ?:Two references on the assumptions state the persons that made these assumptions
• I think it would be nice to have a comparison of the effectiveness of the different methods:That should be a whole different article as it is more of a matter of taste what is more efficient in different areas and circumstances. There is a lot of literature on that, you can chack it through the references
• SOmetimes I think you can drop some of the references like in the following example - mixed integer programming for portfolio selection with pragmatic characteristics [24] [25] [26] [27] [28]:Fixed it
• COuld you write the advantages of the methods - it would stick more to the structure of a method article (unless there are no advantages):No specific advantages except the obvious advantages of linear against quadratic problems in terms of solvability
• chech the "in order to” cause there are plenty of missing „to” like in "In order a business to minimize”:Done it, thanks!

Conclusion : Nice article, lots of information but try to structure things to make it more reader-friendly.

[edit] Reviewer 2 - Biankajuh

1. I have find the description of the models very accurate. Also commendable that you mention the implementations and the limitation/disadvantages of the certain Financial Portfolio Optimization Methods. Furthermore, I really like the usage of direct links to other articles and websites. It shows a very precise job and makes it easy to follow and read up in the certain topic.
2. Structural suggestions:
   1. I would suggest to write a brief abstract section for the beginning of the article. That would help the reader to find a short few sentences summary about the main aspect and purpose of this work.:did it,thanks for the info!
   2. Did I assume correctly that the section of “Financial Portfolio Optimization Methods in PPM” is more about the history? Would it make more sense to refer on it rather as History perhaps also in the title of the section?:Fixed it, I think it is more clear now
3. As for me, you could make the article easier to read by defining some expressions such as “assets” in the given circumstances (similarly like you defined “investor” in the same paragraph). Please also consider to define abbreviation such as MPT. (Financial Portfolio Optimization Methods in PPM):Fixed it, and recheck the definition of assets, given as " Consider "assets" to be financial, physical, or information"
4. The article is nicely illustrated with the pictures which help the understanding. Although, I would suggest to name them as ‘’Figure 1, 2, 3, …etc.’’ which would allow to refer to the pictures at the relevant place of the text. For example: “Figure shows an example where all the possible portfolios which are formed based on the expected return and risk relations.” - Here you could specify by saying Figure 2.:Fixed that,thanks!
5. At the first picture entitled as “Translation of MPT criterias to PPM criterias”, you use MPT in the title and also in the article above it, however, it says MPM in the figure itself. Are MPT and MPM referring to the same subject? Could you define what they are?:Fixed the figure,my mistake.!
6. Grammatical/Formatting hints:
   1. “Application of methods of financial portfolio optimization can help a project manager to evaluate projects taking in consideration the interaction and influence of other projects” (Financial Portfolio Optimization Methods in PPM) —> Dot is missing from the end of the sentence. Plus I would suggest to change the word order for the following: “Application of methods of financial portfolio optimization can help a project manager to evaluate projects taking the interaction and influence of other projects in consideration.”

Reviewer 3 – User: s113735

Feedback:

Formal Aspects:

• The article clearly follows the “method or tool” requirement for the wiki article
• I recognize very few spelling errors. Things I were able to find are small mistakes like omitting a word or missing a large letter in the beginning of a new sentence:

“In order [for] a business to minimize the danger of exposure to a failed project… “:Fixed,thanks.! “… strategic alignment and resource levelling. [A]application of such methods…”

• I am not sure I fully understand figure 1: “Tranlation of MPT criterias to PPM criterias”, maybe this can be elaborated better? You second figure is well explained and easy to understand.
• You make great use of the <math></math> tool in your article. And although the content is quite complex, it gives the article a wiki-“esque” feeling, which is good.

Content Aspects:

• The article is clearly within the topic scope, as it directly relates to a “portfolio” topic
• You clearly have extensive knowledge of the subject and your very rigid use of references show me that you back up every statement you make. Sadly, (and this is of no fault of yours or a drawback to the content of the article) most of your references are hard-copy (aka. Book) references so I do not currently have to possibility to review your sources.
• “Northwestern” part of the curve… Why not “Top left?”:Fixed!Thanks!
• I have no idea what “[καινουριο paper CVaR]” (in the CVaR model section) is or means, maybe this is something you left by mistake in the article?:Some greek over there..Fixed it.!
• The size, quality and references of the article are definitely up to par. It is very clear that you know much more about the topic than I ever will.

Overall conclusion:

As mentioned, it is very clear by the content and quality of the article, that you have extensive knowledge of the tools you present. The only, albeit minor, drawback is that I feel the article is not very engaging. I think the article could benefit a lot from a few “bridging” sentences about the general purpose of the models you present – some more example uses or sentences of how exactly they relate to portfolio management. I think that would really bind the article together.