Investment Disclaimer

Educational Purpose Only

FolioForecast is designed as an educational and analytical tool to help users understand portfolio optimization concepts, including:

• Modern Portfolio Theory and mean-variance optimization
• Risk metrics such as volatility, Sharpe ratio, CVaR, and drawdown
• Diversification principles and correlation analysis
• The relationship between risk and expected return

The Service is intended to supplement, not replace, professional financial advice and your own research and judgment.

Limitations of Optimization Models

Model Assumptions

Portfolio optimization relies on mathematical models that make simplifying assumptions, including:

• Historical data is representative: Models assume past returns, volatilities, and correlations will persist. This is often not the case.
• Normal distributions: Many models assume returns follow a normal distribution. In reality, markets exhibit "fat tails" with more extreme events than models predict.
• Static parameters: Correlations and volatilities change over time, especially during market stress.
• No transaction costs: Models typically ignore trading costs, bid-ask spreads, and market impact.
• Perfect liquidity: Models assume you can trade any amount at quoted prices, which may not be true for all securities.

Estimation Error

Expected returns are notoriously difficult to estimate. Small errors in return estimates can lead to dramatically different "optimal" portfolios. This is known as the "error maximization" problem in portfolio optimization.

Overfitting Risk

Optimization can find portfolios that performed well historically but may not perform well in the future. This is especially true when:

• Using short time periods for analysis
• Optimizing with many assets and few constraints
• Repeatedly adjusting parameters to improve backtested results

Data Accuracy

While we strive to provide accurate market data, we cannot guarantee:

• The accuracy, completeness, or timeliness of historical price data
• That data is free from errors, omissions, or adjustments
• That dividends, splits, and corporate actions are correctly reflected
• Availability of data for all securities or time periods

Market data is sourced from third-party providers and is provided "as is" without warranty. You should verify any data before making investment decisions.

Your Responsibilities

By using FolioForecast, you acknowledge and agree that:

• You are solely responsible for your investment decisions
• You will conduct your own research and due diligence
• You understand the risks involved in investing
• You will consult appropriate professionals (financial advisors, tax advisors, attorneys) as needed
• You will not rely solely on FolioForecast output for investment decisions
• You understand that optimization results are not predictions or guarantees

Regulatory Disclosure

FolioForecast is not:

• Registered with the U.S. Securities and Exchange Commission (SEC)
• Registered with any state securities regulator
• A registered investment advisor under the Investment Advisers Act of 1940
• A broker-dealer registered under the Securities Exchange Act of 1934
• A member of FINRA or SIPC

Nothing on this website should be construed as an offer to sell or a solicitation of an offer to buy any security.

International Users

This Service is operated from the United States. If you access the Service from other countries, you are responsible for compliance with local laws. The information provided may not be suitable for residents of all jurisdictions.

Questions?

If you have questions about this disclaimer or the Service, please contact us:

• Email: [email protected]
• Website: www.folioforecast.com