The equity premium puzzle has troubled economists for over 30 years. I’ve solved it, and in the process identified a major flaw with investment theory. Put simply, the puzzle is: “Equities (stocks) have provided a real return of about 7% for the last 100 years. The risk-free rate (treasury bills) has provided about 1% of…
Month: April 2019
Geometric Balancing, Unlevered
The following begins a detailed look into Geometric Balancing. We start with the results of the unlevered portfolio. This portfolio is tuned to target a max 15% drawdown which it does (I will explain in another post how that works. ) Click on any chart to expand it for better clarity. As discussed in the…
The Most Misunderstood Force in the Universe
I once believed Einstein called compound interest the most misunderstood concept in the world. He didn’t. Google claims he actually said, “compound interest is the most powerful force in the universe”.1 Well, I’m going to build on Einstein’s supposed quote and state that: “Random compound interest is the most misunderstood force in the universe.” The…