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Then, once we did that we could plug that into the formula that
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I gave you last time and
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get the standard deviation of the portfolio
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and the expected return on the portfolio.
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From then on,if you accept the analysis
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and the assumptions or the estimates that underlie it,
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then we pretty much know how to construct portfolios.
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The underlying estimates may not accord with your belief
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or your intuitive sense of common sense.
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The other thing that I mentioned last time was that
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there seems to be a really big difference
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between the expected return on the stock market