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Market-moving events and their role in portfolio optimization of generations X, Y, and Z

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  • Iwanicz-Drozdowska Małgorzata

    (Collegium of Management and Finance, SGH Warsaw School of Economics, Warsaw, Poland)

  • Rogowicz Karol

    (Collegium of Management and Finance, SGH Warsaw School of Economics, Warsaw, Poland)

  • Smaga Paweł

    (Collegium of Management and Finance, SGH Warsaw School of Economics, Warsaw, Poland)

Abstract

We examine how generations X, Y, and Z might react to market-moving events over short- and long-term horizons to maintain an optimal balance among risk, return, and investor preferences. To analyze various portfolio variants, we use data on selected global assets and several types of economic and non-economic events for 2000-2021H1, applying the mean-variance optimization procedure. According to our results, in optimal portfolios, fixed-income assets dominate and are the main driver of portfolio adjustments. Portfolios with short-term horizons with less risk-averse investors and those for generation Z are the most reactive to analyzed types of events. None of the events per se creates an extraordinary opportunity to increase returns. However, expansionary monetary policy generates the greatest potential for incremental returns. Our findings provide practical implications for investors on how to adjust their portfolios in response to significant market events.

Suggested Citation

  • Iwanicz-Drozdowska Małgorzata & Rogowicz Karol & Smaga Paweł, 2023. "Market-moving events and their role in portfolio optimization of generations X, Y, and Z," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 59(4), pages 371-397, December.
    • Handle: RePEc:vrs:ijomae:v:59:y:2023:i:4:p:371-397:n:2
    DOI: 10.2478/ijme-2024-0001
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    More about this item

    Keywords

    market events; risk aversion; portfolio management; portfolio vulnerability;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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