Over the last month, very few assets have provided any return. Many strategies that weathered the downturn well included some type of short selling program. I don’t sell assets short, so I’ve leaned on other methods for survival. But if short selling helps a portfolio during bear markets, why don’t I short? Well simply put,…
Category: Philosophy
Viral Uncertainty
It has been a strange month in the markets. Not only is the S&P 500 off to it’s fastest collapse from an all time high ever, other assets are collapsing as well. Stocks, bonds, and gold sold off the most they ever have in unison on March 11th, only to fall more on March 18th.…
A Trip Around The Sun
One year ago today I published my first post, starting a journey outlining my unique views on investing. Ironically, one year later the S&P 500 index is nearly at the exact same place it was on that night. (2746.56 this morning vs 2743.07 a year ago). While the market has followed the earth, returning to…
The Ultimate 401k Strategy
Many financial professionals would find the premise behind this post reckless. I’m not going to argue with them. Trading a 401k plan can be a terrible idea. It’s certainly foolish if you’re just using your gut or poor financial signals to time the trades. But would Geometric Balancing work within the confines of a 401k? …
To Infinity and Back
Out of the blue, my daughter says to me: “Infinity is when you keep counting forever.” That’s not something you hear every day from a 4 year old. We have been working on simple addition, so intrigued, I ask her: “What is infinity plus 1?” My daughter looked at me confused: “Daddy, counting to infinity…
Convergence Time
There’s a saying about prediction models, garbage in/garbage out. All true. This begs the question, how long do you have to sift through garbage until you actually find something useful? The answer depends on what you are looking for. I’m often asked about the “look back” periods in Geometric Balancing. Many investment models use months…
Portfolio Blitzkrieg
With no fear of the future and full trust in my model, Geometric Balancing can theoretically achieve eyepopping returns. A backtest with “extreme leverage” produces 56% annual arithmetic average return. To do so, you would have to fully push the strategy with no safety factors, averaging 5x leverage, and driving up to 12x at times. While…
Optimal Portfolios For Two Assets
Let’s discuss the proper way to mix two risky assets in a portfolio. I explained mixing one risky asset with cash before. Let’s up the complexity. I’m going to continue exploring how to mix assets3 with the aim of maximizing your long term wealth through the geometric return. If you haven’t read the prior post…
What is the Expected Return?
Everyone agrees on the expected values at the extremes – it’s the middle that confuses people. For a single period, the expected value is the arithmetic average. Over a very long time (infinite), the expected value is the geometric average. But in-between the expected value becomes less obvious. Let’s shed some light on this problem.…
Stocks, Treasuries, and Gold
Everything should be made as simple as possible, but not simpler. Albert Einstein How can only three assets plus cash produce such amazing returns? Well, all three assets complement each other in way other assets just can’t. They work so well together, there really isn’t any reason for anything else. Simplify as much as possible,…