= q + 8 (7.1)   where p = ^-vector of weights in the view portfolio, one for each of the n assets u, = ^-vector of expected excess returns on underlying assets q = Expected excess return of the portfolio e = Normally distributed random variable The confidence in the view is 1/co where m is the variance of 8. As an example, in order to express a bearish view on German equity, let p have weights reflecting a portfolio long 1 percent of German equities, in other words all zeros except a value of .01 for German equity. We let q reflect the 80 basis points less than equilibrium annualized performance suggested above. We specify a degree of confidence of 4 to reflect a one standard deviation uncertainty around q of 50 basis points. The Black-Litterman optimal portfolio, shown in Table 7.5, is simply TABLE 7.5 Black-Litterman Portfolio Reflecting a Bearish View on German Equity Country Unconstrained Change from Market Cap Percent Change from Market Cap     United States 58.7% 4.7% United Kingdom 11.5 0.9 Japan 10.7 0.9 France 4.8 0.4 Switzerland 3.8 0.3 Germany -5.2 -8.5 Netherlands 2.8 0.2 Canada 2.5 0.2 Italy 1.9 0.2 Australia 1.9 0.2 Spain 1.5 0.1 Sweden 0.9 0.1 Hong Kong 0.9 0.1 Finland 0.7 0.1 Belgium 0.5 0.0 Singapore 0.4 0.0 Denmark 0.4 0.0 Ireland 0.3 0.0 Norway 0.3 0.0 Portugal 0.2 0.0 Greece 0.2 0.0 Austria 0.1 0.0 New Zealand 0.1 0.0 -259 1%   Volatility Expected return 15.9 7.7