New strategy minimizes wealth variance, ensuring financial success in dynamic markets.
The article explores how to build a portfolio of stocks and a risk-free asset to reach a target wealth while minimizing risk. The agent can adjust the target wealth based on their current situation. Three target options are considered: a target return rate, a risk-free payoff plus a premium, and a mix of risk-free payoff and an aspiration level. The study shows that the agent can effectively reduce the risk of wealth changes while meeting certain expectations.