Black-Litterman Model

The Black-Litterman Model is a sophisticated investment tool used to optimize asset allocation in portfolios. It combines the expected returns from traditional market data with an investor's own views or insights about specific assets. This creates a more balanced approach to forecasting returns, blending market consensus with personal beliefs. By doing so, it helps investors achieve better risk-adjusted returns, allowing them to express their views while respecting the broader market trends. Essentially, it refines predictions to create a more tailored investment strategy.