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Discussion Starter #1 (Edited)
Hey everybody,

I've been building Monte-Carlo simulations in Excel to try out different investing strategies, such as rebalancing at different frequencies or at different deviations, testing the effects of volatility, fund correlations, etc, etc...

It's been quite insightful to me and I'm wondering if it might be worthwhile to advertise my services in Monte-Carlo report generation for investors. I know that there's already software out there, but there are way too many parameters to account for to be able to include them all in one product. Therefore, I wonder if custom reports and/or spreadsheets might be a better choice for people who don't want to spend hundreds on software.

I'm thinking of setting up a website for my business, but I wanted to check in with you guys first to see what advice you could offer me. I'm sure that there's lots of angles that I haven't considered at all!

thanks!

Blackjacques
 

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I'm not clear I understand what you are asking.

I've used many different Monte Carlo simulators (and other projection software to handle sequence of return risk, establish best- and worst-case scenarios based on the CRSP data, etc.); as stand-alone products and as part of financial planning software.

If I understand your question correctly, you are looking to see whether you could market and sell customized MC scenarios for individual investors. If that is your question, my suggestion would be to for you to figure out what the specific benefit is to the investor such that he or she would be interested in having a customized MC analysis done.

Take a look at this free tool, here. Not an MC analysis, but gives you worst and best info for an infinite number of portfolios, and it's free.

See also this tool, which discusses some of the limitations of MC analysis. (Read down on that page to find a link to an article on the shortcoming of MC analysis.)

I'm not suggesting you need to do anything with either of those links, just providing them to give you a sense of what is already out there, and what your "competition" would be for the service I think you are interested in offering.
 

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One of the problems I have with traditional MC analysis is that many programs simply look at the investments in a vacuum. They don't take other considerations into account such as the effect of other non-investment elements in an individual's financial environment. Even when rates are set deterministically, the withdrawal and deposit schedule of the investment stream should fluctuate quite significantly due to the realities of other things such as loan pmts, CPP&OAS pmts which are discontinuous over time, and the important effect of income tax, as it interacts with the different forms of capital as they come in and out of play over time.

Plus the other issue is that most MC analysis concentrates on when capital runs out. I find this sort of uninformative...."Your capital will run out at age 78 (worst case) age 97 (best case) or 87 (median case)" I don't get a good feel for how these stats should govern my fiscal behaviour (spending, saving, withdrawing) over time.

Just my thoughts.
 

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Discussion Starter #4
Thanks so much for the info!

MoneyGal, I think you understood me perfectly, as the links that you gave me gave me a very solid idea as to what kind of free tools are out there.

Steve41, you are absolutely right that Monte-Carlo simulators always leave out some vital factors, such as investor emotion, world events, etc...

They are just one tool among many.

I think that my custom reports and spreadsheets can offer a few more features/parameters than the free tools, so I may just open up shop and see if there's any interest.

I will probably post a spreadsheet that I made for myself at some point. It's a lot of fun to plug in numbers and see what comes out!

Rob
 

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Monte-Carlo simulators always leave out some vital factors, such as investor emotion, world events, etc...
I am not talking about external events... I am talking about the fact that other non-investement factors... loan pmts, pension/cpp/oas, future capital gain (inheritance, selling the cottage), salary downsize, and the effect of income tax..... elements which drastically vary over time.... these should be part of a comprehensive MC study.
 

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Risk management

I have been able to find a way of readership that I would suggest you a take to build up a fan following before monetizing. Almost 3 months ago I started a blog Ecothrust on economy and ecology, but have so far only 7 followers till date despite 52 posts & availability on amazon kindle . So the process of self publishing is slow. However I have now found a better path to get readership that I will share with you.

I come from the Project background and not core finance, and though I have had the opportunity to use & observe Monte Carlo applications from both angles, I am not a expert. I have, based on my Book of "Project Management Time Cycle Module" , build some application based solutions to Risk management. It draws strengths from variance analysis, VaR as well as predictive analytics now being increasingly used in marketing and engineering applications ( also popular as cloud computing) and contradicts a few known and popular concepts that I personally consider as outdated in today's risk scenerio. I have recieved a fairly steady response to my first slide show presented at slideshare " Living dangerously, Managing risks in business" with 450 views and 30 plus downloads in 5 days. I am following it up with the case studies to ensure that the interest continues and it helps sell my Book as well as build a platform for a future book through reader loyalty. I know you may say it is time consuming but I found it a good way to ensure a high quality global readership.

I'm not clear I understand what you are asking.

I've used many different Monte Carlo simulators (and other projection software to handle sequence of return risk, establish best- and worst-case scenarios based on the CRSP data, etc.); as stand-alone products and as part of financial planning software.

If I understand your question correctly, you are looking to see whether you could market and sell customized MC scenarios for individual investors. If that is your question, my suggestion would be to for you to figure out what the specific benefit is to the investor such that he or she would be interested in having a customized MC analysis done.

Take a look at this free tool, here. Not an MC analysis, but gives you worst and best info for an infinite number of portfolios, and it's free.

See also this tool, which discusses some of the limitations of MC analysis. (Read down on that page to find a link to an article on the shortcoming of MC analysis.)

I'm not suggesting you need to do anything with either of those links, just providing them to give you a sense of what is already out there, and what your "competition" would be for the service I think you are interested in offering.
 

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Risk management

:cool:

Hi

Ihave been able to find a way of readership that I would suggest you a take to build up a fan following before monetizing. Almost 3 months ago I started a blog Ecothrust on economy and ecology, but have so far only 7 followers till date despite 52 posts & availability on amazon kindle . So the process of self publishing is slow. However I have now found a better path to get readership that I will share with you.


I come from the Project background and not core finance, and though I have had the opportunity to use & observe Monte Carlo applications from both angles, I am not a expert. I have, based on my Book of "Project Management Time Cycle Module" , build some application based solutions to Risk management. It draws strengths from variance analysis, VaR as well as predictive analytics now being increasingly used in marketing and engineering applications ( also popular as cloud computing) and contradicts a few known and popular concepts that I personally consider as outdated in today's risk scenerio. I have recieved a fairly steady response to my first slide show presented at slideshare " Living dangerously, Managing risks in business" with 450 views and 30 plus downloads in 5 days. I am following it up with the case studies to ensure that the interest continues and it helps sell my Book as well as build a platform for a future book through reader loyalty. I know you may say it is time consuming but I found it a good way to ensure a high quality global readership You can try this link and see the response as well as the slideshare site http://tinyurl.com/lzokqy

Sandip

Hey everybody,

I've been building Monte-Carlo simulations in Excel to try out different investing strategies, such as rebalancing at different frequencies or at different deviations, testing the effects of volatility, fund correlations, etc, etc...

It's been quite insightful to me and I'm wondering if it might be worthwhile to advertise my services in Monte-Carlo report generation for investors. I know that there's already software out there, but there are way too many parameters to account for to be able to include them all in one product. Therefore, I wonder if custom reports and/or spreadsheets might be a better choice for people who don't want to spend hundreds on software.

I'm thinking of setting up a website for my business, but I wanted to check in with you guys first to see what advice you could offer me. I'm sure that there's lots of angles that I haven't considered at all!

thanks!

Blackjacques
 
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