on the basis of factors
or nuances not taken into account by the formal computations.
Using this revised set of pi knduij, the set of efficient E, V combinations
could be computed, the investor could select the combination he
preferred, and the portfolio which gave rise to this E, V combination could be found.
One suggestion as to tentative pi, aijis to use the observed pi, aii
for some period of the past. I believe that better methods, which take
into account more information, can be found. I believe that what is
needed is essentially a \of security analysis.
I will not pursue this subject here, for this is \
a story of which I have read only the first page of the first chapter.
In this paper we have considered the second stage in the process of
selecting a portfolio. This stage starts with the relevant beliefs about
the securities involved and ends with the selection of a portfolio. We
have not considered the first stage: the formation of the relevant beliefs
on the basis of observation.
15. Care must be used in using and interpreting relations among aggregates. We cannot
deal here with the problems and pitfalls of aggregation.