Quite a good week. Up about 1.7%. I’m pretty shocked by the portfolio rebalance today. I didn’t expect to drop bonds entirely any time soon. The portfolio is also right on the cusp of bringing in cash, which is strange. Furthermore, we’re looking at a very large change from week to week in holdings. Unlike…
Klay Thompson From Downtown: Why I’m Skeptical of Momentum, and You Should Be Too
Momentum investing might be a fraud. I’m positive pieces of it are. Momentum studies actually display evidence of a random market, evidence which some very very smart people use to disprove the efficient market theory. Sadly, they didn’t truly understand randomness. Open up your mind for this one, it’s going to get deep and very weird.
Portfolio on 6.14.19
An average week this week. Up about 0.2%. Nothing special, but the market was pretty calm in general. Very little change in the overall portfolio as well. On June 14th, 2019, the portfolio rebalanced to: 52% SPY , 32% TLT , 16% GLD
My Current Portfolio
The stock market is fractal, and thankfully geometric balancing is too. My preferred version of the strategy focuses on daily returns. It doesn’t necessary trade daily, but it watches daily returns and applies the concepts discussed so far (and many others to come later) to optimize the long term return. I’ve found similar, albeit a…
When You Eat Matters More Than What You Eat.
Nassim Taleb has an interesting story from Antifragile that correlates uniquely to investing strategies. The passage is as follows: “And one blatant denial of convexity bias is the theory about the benefits of the so-called Cretan (or Mediterranean) diet that triggered a change in the eating habits of the U.S enlightened class, away from steak…
Why Market Index Investing Works
Why does market index investing work so well? Most say it’s because you can’t beat the market over the long run, so why try. That nonsense. Index investing works by automatically “rebalancing” multiple assets, and by rebalancing more frequently, you can easily beat the market. Let’s investigate further. The Components I’m going to use the…
Solving the Equity Premium Puzzle, and Uncovering a Huge Flaw in Investment Theory.
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…
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…
A Random Market?
I received a copy of Burton Malkiel’s famous book “A Random Walk Down Wall Street” 15 years ago. The book lays out the case for why stock market investment returns are random and passive investing is preferred over trying to beat the market. It strongly supports the efficient market hypothesis. At least this is why…