R30 BB9 - CPPI, Buy and Hold, CM

Make sense. In upward trending market risk tolerance increases more for CPPI and B&h because the equity weight increases. In constant mix the equity weight should be the same.
 
Conclustion:
- Rroportional risk tolerance => constant-mix
- Risk tolerance increases more than proportionately with changes in wealth => CPPI or Buy and Hold

Correct?
 
Did you change your original post? It wasn’t 20% for 20% increase in wealth when I first read this….
 
Is below Buy and Hold conclusion correct??
For Buy and hold
- Risk tolerance increases proportionately with wealth
- Risk tolerance increases more than proportionately with changes in wealth
Ah…I need a formula….
 
Below from Schweser, i find it’s useful.
Constant-Mix (CM)
• Absolute risk tolerance varies directly with wealth.
• Relative risk tolerance remains constant regardless of wealth level.
 
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