American economist (born 1927)
POPULARITY
6 episodes with Harry Markowitz
3 episodes with Harry Markowitz
3 episodes with Harry Markowitz
2 episodes with Harry Markowitz
3 episodes with Harry Markowitz
2 episodes with Harry Markowitz
2 episodes with Harry Markowitz
2 episodes with Harry Markowitz
Key Takeaways: 1.Volatility Isn't the Same as Risk Volatility means prices are changing a lot—up and down. Risk is the chance of losing money permanently. Just because something is bouncing around doesn't mean it's dangerous—it could be an opportunity. 2. Math Doesn't Tell the Whole Story Many investors use formulas to try to predict risk. But markets are influenced by people's feelings, news, and unexpected events—things math can't fully capture. So, relying only on numbers can cause people to miss the bigger picture. 3. Smart Investors Use Volatility to Win When prices drop suddenly, good investors look for great companies that are now “on sale.” They buy low when others are scared and sell high later when the price recovers. 4. A Real-Life Example: MSTR Stock The stock for MicroStrategy (MSTR) went through big price swings. Investors who understood this and bought when it was down saw big gains as the price later shot up. 5. Volatility = Growth Without price changes, there would be no chance to “buy low and sell high.” Volatility keeps the market moving and opens doors for financial growth over time. Chapters: Timestamp Summary 0:00 Introduction to Volatility and Misconceptions 0:42 The Math Trap and Harry Markowitz's Influence 1:57 Flaws of Equating Volatility with Risk 3:17 Limitations of Mathematical Models 4:32 Misinterpretations and AI Overestimations 5:37 Volatility Equals Growth and Investment Examples 8:22 Consequences of No Volatility and Final Thoughts Powered by Stone Hill Wealth Management Social Media Handles Follow Phillip Washington, Jr. on Instagram (@askphillip) Subscribe to Wealth Building Made Simple newsletter https://www.wealthbuildingmadesimple.us/ Ready to turn your investing dreams into reality? Our "Wealth Building Made Simple" premium newsletter is your secret weapon. We break down investing in a way that's easy to understand, even if you're just starting out. Learn the tricks the wealthy use, discover exciting opportunities, and start building the future YOU want. Sign up now, and let's make those dreams happen! WBMS Premium Subscription Phillip Washington, Jr. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
Unlock the secrets of crafting a robust investment portfolio with insights that challenge conventional wisdom. Join me, Michael Gayed, alongside experts Matt O'Brian and Brad Barrie, as we explore the critical role of diversification and the potential risks when concentration takes center stage. We'll unravel the intricacies of true diversification, discuss "line item risk," and emphasize why preparation should be prioritized over prediction in the ever-volatile market landscape.Our conversation ventures into the uncharted territory of risk management by challenging traditional views on asset allocation. With insights from Harry Markowitz and our guests' expertise in tactical management, we highlight the necessity of understanding varying risk profiles rather than simply spreading investments across asset classes. As we dissect the influence of market psychology and valuation metrics, you'll learn how these elements affect investment decisions, especially during economic downturns.Discover innovative strategies for navigating complex market environments through mutual funds and global macro hedge fund approaches. This episode uncovers the often-overlooked advantages of mutual funds in less traditional asset classes and their synergy with hedge fund strategies. As markets continue to shift, we advocate for tactical active approaches and flexible portfolio management, ensuring you're equipped to adapt and thrive in a fluid financial world.DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Dynamic Wealth Group and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions. Sign up to The Lead-Lag Report on Substack and get 30% off the annual subscription today by visiting http://theleadlag.report/leadlaglive. Foodies unite…with HowUdish!It's social media with a secret sauce: FOOD! The world's first network for food enthusiasts. HowUdish connects foodies across the world!Share kitchen tips and recipe hacks. Discover hidden gem food joints and street food. Find foodies like you, connect, chat and organize meet-ups!HowUdish makes it simple to connect through food anywhere in the world.So, how do YOU dish? Download HowUdish on the Apple App Store today:
Breit gestreut, nie bereut - nicht alles auf eine Aktie setzen! Am Montag, den 27. Februar 2025 sackte die Aktie des renommierten Chipherstellers Nvidia 17 Prozent ab, absolut ist dies der höchste Tagesverlust der Börsengeschichte . An einem einzigen Tag war Nvidia plötzlich 589 Milliarden US Dollar weniger an der Börse wert. Also doch lieber beim guten alten Bargeld und Sparbuch bleiben? Das wäre nicht sehr clever. Man darf nur nicht alle Eier in einen Korb legen, wie der amerikanische Wirtschaftsnobelpreisträger Harry Markowitz immer so schön zu sagen pflegte. Den ich übrigens, um meine Freude und meinen Stolz mit Euch zu teilen, noch persönlich interviewen durfte. Also was meinte Harry damit: Für einen Investor sind zwei Dinge entscheidend: Das Verlustrisiko und die Rendite – sprich der Gewinn. Das Verlustrisiko kann man erheblich reduzieren, wenn man nicht in einen Börsenwert investiert, sondern in mehrere und das ohne deshalb unbedingt im gleichen Ausmaß auf Gewinn verzichten zu müssen. Um in mehrere Wertpapiere investieren zu können, muss man nicht reich sein. Dafür gibt es spezielle Geldanlagen, mit denen man nicht in einzelne Werte, sondern gleich in einen Korb von Wertpapieren investiert. Das sind zum einen aktive Investmentfonds, bei denen Fondsmanager, also Wertpapierexperten, für Dich passende Wertpapiere aussuchen in die Du alle investiert. Oder Du investierst in einen ETF, vulgo exchange traded funds. Das ist einer über die Börse gehandelte Indexfonds, an dem Du Anteil erwirbst. Hier sucht kein Experte für Dich den Korb von Wertpapieren aus, sondern der Korb setzt sich automatisch genauso so wie ein bestimmter Index zusammen. Du hast vielleicht schon mal vom berühmten S&P 500 Index gehört, der die Entwirklung der 500 wertvollsten Unternehmen der USA wiederspiegelt. Oder Du hast vom MSCI World schon gelesen, der die Kursentwicklung von rund 1.500 Aktien aus 23 Industrieländern abbildet. Um zum aktuellen Beispiel Nvidia zurückzukommen: Hättest Du beispielsweise Deine 1000 Euro nicht nur in Nvidia-Aktien gesteckt, sondern breit gestreut mit einem ETF auf dem S&P 500 gesetzt, hättest Du an dem jüngsten schwarzen Montag nicht 170 Euro verloren, sondern 1,30 Euro. Aber natürlich: Wenn´s bei Nvidia aufwärts geht, bist Du auch nicht voll dabei. Welcher Risikotyp Du bist und ob Du Dir solche Verluste mental und finanziell leisten kannst, dazu später. Ich persönlich finde es jedenfalls keine gute Idee, mit einer einzigen Aktie mit dem Investieren zu starten. Was es neben Einzelaktien, Aktienfonds und Aktien-ETFs noch für Geldanlagen gibt, von denen Du Dir innerhalb eines bestimmten Zeitraums einen Wertzuwachs versprechen kannst und die sich auch für Deinen Vermögensaufbau eignen, dazu mehr in nächsten Folge der Börsenminute, immer wieder samstags. Anlegen2go! Go! Investieren heute, nicht übermorgen! Happy Investing wünscht Euch Julia Kistner Musik- & Soundrechte: https://www.geldmeisterin.com/index.php/musik-und-soundrechte/ Risikohinweis: Dies sind weder Anlage- noch Rechtsempfehlungen. Was ihr aus dem Inhalt der Börsenminute macht, liegt in Eurer Hand und Eurer Verantwortung. Podcast-Host Julia Kistner übernimmt dafür keinerlei Haftung. #Diversifikation #Nvidia #Vermögen #anlegen #Einzelaktie #ETF #Fonds #investieren
Have you ever wondered how the world's top financial thinkers shaped the way we invest today? In this episode, Ben and Cameron sit down with Professor Stephen Foerster from the Ivey Business School to explore the evolution of modern investing. As a distinguished financial expert and co-author of In Pursuit of the Perfect Portfolio, Professor Foerster dives into the groundbreaking work of financial pioneers like Harry Markowitz, Bill Sharpe, Gene Fama, and others, unpacking their remarkable contributions to portfolio management, risk assessment, and market efficiency as we know it today. Tuning in, you'll gain a deeper understanding of Markowitz's revolutionary diversification theory, Sharpe's introduction of beta as a risk measure, and Fama's Efficient Market Hypothesis, as well as each of their perspectives on the “perfect portfolio,” tying together the history, theory, and practical application of modern investment strategies. Whether you're looking to sharpen your strategy or build your investment knowledge from the ground up, this conversation with Professor Foerster is packed with actionable takeaways and fascinating stories that could change the way you approach your financial future. Don't miss this opportunity to learn from the thought leaders who shaped the market! Key Points From This Episode: (0:03:29) Contrasting the historical art of investing with the modern science of investing. (0:04:44) Markowitz's diversification theory and the importance of balancing risk and return. (0:09:39) Sharpe's capital asset pricing model (CAPM) and his contribution to measuring risk. (0:16:13) Insight into Fama's Efficient Markets Hypothesis and the joint hypothesis problem. (0:19:13) The rise of factor investing and the significance of Fama-French's three-factor model. (0:23:26) Unpacking Shiller and Fama's main point of disagreement on bubbles. (0:26:50) Bogle's perfect portfolio and persistence about the index fund, despite resistance. (0:29:37) How the Black-Scholes-Merton (BSM) option pricing formula changed the world. (0:34:37) Ways that Merton contributed to portfolio theory and his take on TIPS. (0:36:20) Key takeaways from talks with Martin Leibowitz, Charlie Ellis, and Jeremy Siegel. (0:37:35) An interesting analogy for Professor Foerster's take on the “perfect portfolio.” (0:40:53) Correlation vs. causation in stock pricing and how it applies to factor investing. (0:46:38) Examples of masterly inactivity and investor lessons from Madoff's Ponzi scheme. (0:52:07) The dangers of FOMO, a SPACs cautionary tale, and lessons from value investors. (1:00:43) Winning at tennis vs. investing and risks of over-reliance on automated decisions. (1:06:02) Long-term lessons from pioneers in finance to improve investment strategies today. Links From Today's Episode: Meet with PWL Capital: https://calendly.com/d/3vm-t2j-h3p Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/ Rational Reminder on X — https://x.com/RationalRemindRational Reminder on TikTok — https://www.tiktok.com/@rationalreminder Rational Reminder on YouTube — https://www.youtube.com/channel/ Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://pwlcapital.com/our-team/ Benjamin on X — https://x.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Cameron Passmore — https://pwlcapital.com/our-team/ Cameron on X — https://x.com/CameronPassmore Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/ Professor Stephen Foerster — https://stephenrfoerster.com/ Ivey Business School — https://www.ivey.uwo.ca/ Stephen Foerster on LinkedIn – https://www.linkedin.com/in/stephen-foerster-26b85319/ Stephen Foerster on X – https://x.com/profsfoerster Stephen Foerster Books — https://www.amazon.com/stores/author/B001KDO1L0 ‘Cristiano Ronaldo snubbed Coca-Cola. The company's market value fell $4 billion.' — https://www.washingtonpost.com/sports/2021/06/16/cristiano-ronaldo-coca-cola/ Books From Today's Episode: In Pursuit of the Perfect Portfolio: The Stories, Voices, and Key Insights of the Pioneers Who Shaped the Way We Invest — https://www.amazon.com/dp/0691229880 Trailblazers, Heroes, and Crooks: Stories to Make You a Smarter Investor — https://www.amazon.com/dp/B0DHLVYK1Q In Pursuit of the Unknown: 17 Equations That Changed the World — https://www.amazon.com/dp/0465085989 A History of Interest Rates — https://www.amazon.com/dp/0471732834 Winning the Loser's Game: Timeless Strategies for Successful Investing — https://www.amazon.com/dp/0071813659 Stocks for the Long Run — https://www.amazon.com/dp/1264269803/ Extraordinary Tennis For The Ordinary Player — https://www.amazon.com/dp/0517511991 Papers From Today's Episode: ‘Efficient Capital Markets: A Review of Theory and Empirical Work' — https://doi.org/10.2307/2325486 ‘The Loser's Game' — https://doi.org/10.2469/faj.v31.n4.19 'The Pricing of Options and Corporate Liabilities' — https://doi.org/10.1142/9789814759588_0001
Since the arrival of Modern Portfolio Theory (MPT) in the early 1950's by the legendary Harry Markowitz, the industry has been sturdily anchored to this philosophy and all of it's artifacts when constructing portfolios. In recent years, however, an enterprising handful of large institutional asset owners have begun challenging the common wisdom of a strategic asset allocation approach given it tends to breed silo behavior, unhealthy competition for resources and attention, unrecognized duplication or disjointed risk exposure across the portfolio, and difficulty in managing the capital pool holistically around a view of the future. This is the story of how CAIA convened some of the most reputable and largest asset owners in the world to amplify the benefits of TPA and perhaps, the beginning of a new era. Guests: Ben Samild, Chief Investment Officer, Future Fund Jayne Bok, CFA, CAIA, Head of Investments, Asia, Willis Towers Watson Episode Sources
#526: Recorded LIVE on stage at the Morningstar Conference in Chicago! We chat with behavioral finance professor Meir Statman. He breaks down the differences between standard finance and behavioral finance, making it clear that understanding human behavior is an essential part of investing. Statman starts by explaining that standard finance assumes people are rational. They make decisions purely based on logic and aim to maximize wealth. However, behavioral finance sees people as normal, not always rational. We often act on emotions and cognitive shortcuts. For instance, people might prefer receiving dividends over selling shares, even if both result in the same financial gain. This is because dividends feel like income, while selling shares feels like dipping into savings. He uses a great metaphor to explain how investors view their portfolios. Think of a dinner plate: behavioral investors like their investments separated, like mashed potatoes on one side, vegetables on another, and steak in the middle. Rational investors don't care if it's all blended together because they only focus on the total nutrients. This shows that normal investors have different needs and want to balance safety with growth. Statman talks about the importance of diversification. He recalls a lunch with Harry Markowitz, the father of Modern Portfolio Theory, who supported the idea of having a mix of safe and risky investments. Markowitz himself had municipal bonds to avoid poverty and stocks to grow wealth. Diversifying helps investors manage risk and meet both their safety and growth needs. We then dive into how people manage money across their life cycle. Statman points out that young people know they need to save but are tempted to spend. They often control this urge by putting money into retirement accounts like 401(k)s. As people get older, they become so good at saving that they sometimes forget to spend and enjoy their money. Statman gives a funny example of his mother-in-law, who refused to replace an old sofa because she didn't want to dip into her savings. Statman also touches on asset pricing and market efficiency. He explains that while traditional finance focuses solely on risk, behavioral finance considers other factors like social responsibility. Some investors are willing to accept lower returns to stay true to their values. Additionally, he argues that market prices do not always reflect true value, and it's hard to predict when they will. Towards the end, we discuss the broader aspects of wellbeing. Statman emphasizes that financial wellbeing is just one part of a happy life. Family, health, work, and community are also crucial. He believes financial advisors should help clients achieve overall life wellbeing, not just financial success. For more information, visit the show notes at https://affordanything.com/episode526 Learn more about your ad choices. Visit podcastchoices.com/adchoices
Do you think there are conspiracies in common financial practices? I do. Michael Edesess thinks so too. He thinks there may be some conspiracies with pensions as well. He explains why strategies like rebalancing, diversification, mean variance optimization, and tax loss harvesting might not be as beneficial as they seem. Michael sheds light on how institutions like Ivy League endowments and public pension funds waste billions on active management that underperforms simple market indices, driven by the industry's profit motives rather than investors' best interests. Today we discuss... Michael's unexpected entry into the finance world, influenced by a classmate's suggestion to explore a brokerage firm using mathematics. Why the finance industry and its practices, such as rebalancing and tax loss harvesting, fundamentally flawed. Michael's perspective on rebalancing, challenging the belief that it improves investment returns, and why he believes this advice is often misguided. The misconception of diversification in mutual funds and clarify the real benefits of diversification according to Harry Markowitz's theory. Modern portfolio theory (MPT) and Michael's critique of its practical application, especially concerning mean variance optimization. Why tax loss harvesting is not as beneficial as commonly perceived and the costs associated with it. Robo advisors, their cost efficiency, and why Michael believes they still don't offer significant value over simple index funds. The inefficiency and high costs of investment management for Ivy League endowment funds and public pension funds, labeling the industry as a conspiracy of inefficiency. Today's Panelists: Kirk Chisholm | Innovative Wealth Barbara Friedberg | Barbara Friedberg Personal Finance Phil Weiss | Apprise Wealth Management Follow on Facebook: https://www.facebook.com/moneytreepodcast Follow LinkedIn: https://www.linkedin.com/showcase/money-tree-investing-podcast Follow on Twitter/X: https://x.com/MTIPodcast For more information, visit the show notes at https://moneytreepodcast.com/conspiracies-in-common-financial-practices-michael-edesess-616
Harry Markowitz, the legendary economist and father of modern portfolio theory, has been credited with saying that diversification is the only free lunch in investing. However, his work on the efficient frontier shows that investors give up expected returns to lower expected risk. This may make diversification even more compelling. With uncertainty becoming a prevailing theme in financial markets and the global economy, focusing on the benefits on diversification could prove valuable for investors. The 60-40 portfolio may have lost its luster in the broad market selloff of 2022, but allocating across a diverse mix of assets is crucial in the long run. This episode of The Outthinking Investor dives into the topic of asset allocation and the role of stocks, bonds and alternatives in a diversified portfolio. Our guests are Antti Ilmanen, Global Co-Head of the Portfolio Solutions Group at AQR Capital Management and author of “Investing Amid Low Expected Returns: Making the Most When Markets Offer the Least”; Scott Cederburg, associate professor of finance at the University of Arizona and co-author of a research paper titled “Status Quo: A Critical Assessment of Lifecycle Investment Advice”; and Lorne Johnson, Head of Multi-Asset Portfolio Design at PGIM Quantitative Solutions. To hear more from PGIM, tune into our new podcast, Speaking of Alternatives, hosted by Eric Adler, President and CEO of PGIM Private Alternatives. Speaking of Alternatives is available on Spotify, Apple, Amazon Music, and other podcast platforms.
Erichsen Geld & Gold, der Podcast für die erfolgreiche Geldanlage
"There is no free lunch", es gibt kein kostenloses Mittagessen! Aus meiner Erfahrung heraus stimmt das spätestens nach dem Auszug aus dem heimischen Elternhaus - und es gilt auch an der Börse: Der Satz wird sehr häufig verwendet, um zu beschreiben, dass man immer irgendetwas riskieren muss, um auch etwas zu bekommen. Niemand anderes als Harry Markowitz hat allerdings auch gesagt: "Es gibt einen Free Lunch"! Wie dieser aussieht, werde ich heute für euch besprechen. ► Den neuen Podcast “Buy The Dip” findet ihr hier: https://buythedip.podigee.io ► Schau Dir hier die neue Aktion der Rendite-Spezialisten an: https://www.rendite-spezialisten.de/aktion ► TIPP: Sichere Dir wöchentlich meine Tipps zu Gold, Aktien, ETFs & Co. – 100% gratis: https://erichsen-report.de/ Viel Freude beim Anhören. Über eine Bewertung und einen Kommentar freue ich mich sehr. Jede Bewertung ist wichtig. Denn sie hilft dabei, den Podcast bekannter zu machen. Damit noch mehr Menschen verstehen, wie sie ihr Geld mit Rendite anlegen können. ► Mein YouTube-Kanal: http://youtube.com/ErichsenGeld ► Folge meinem LinkedIn-Account: https://www.linkedin.com/in/erichsenlars/ ► Folge mir bei Facebook: https://www.facebook.com/ErichsenGeld/ ► Folge meinem Instagram-Account: https://www.instagram.com/erichsenlars Quelle der Audio-Snippets, abgerufen am 16.05.2024: URL: https://www.youtube.com/watch?v=bM9bYOBuKF4&t=137s Titel: Are markets efficient? Kanal: Chicago Booth Review URL: https://erichsen.podigee.io/521-gold-gefallt-mir-viel-besser-als-bitcoin-mit-sebastian-hell Titel: Gold gefällt mir viel besser als Bitcoin!" - mit Sebastian Hell Kanal: Erichsen Geld & Gold, der Podcast für die erfolgreiche Geldanlage URL: https://www.youtube.com/watch?v=HHMEmOu4ZDw Kanal: ARD-Mediathek Die verwendete Musik wurde unter www.soundtaxi.net lizenziert. Ein wichtiger abschließender Hinweis: Aus rechtlichen Gründen darf ich keine individuelle Einzelberatung geben. Meine geäußerte Meinung stellt keinerlei Aufforderung zum Handeln dar. Sie ist keine Aufforderung zum Kauf oder Verkauf von Wertpapieren. Offenlegung wegen möglicher Interessenkonflikte: Die Autoren sind in den folgenden besprochenen Wertpapieren bzw. Basiswerten zum Zeitpunkt der Veröffentlichung investiert:-
Since the arrival of Modern Portfolio Theory (MPT) in the early 1950's by the legendary Harry Markowitz, the industry has been sturdily anchored to this philosophy and all of it's artifacts when constructing portfolios. In recent years, however, an enterprising handful of large institutional asset owners have begun challenging the common wisdom of a strategic asset allocation approach given it tends to breed silo behavior, unhealthy competition for resources and attention, unrecognized duplication or disjointed risk exposure across the portfolio, and difficulty in managing the capital pool holistically around a view of the future. This is the story of how CAIA convened some of the most reputable and largest asset owners in the world to amplify the benefits of TPA and perhaps, the beginning of a new era. Guests: Ben Samild, Chief Investment Officer, Future Fund Jayne Bok, CFA, CAIA, Head of Investments, Asia, Willis Towers Watson Episode Sources
Today's podcast is titled, “Another 40 or 50 Years.” From 1997, winners of the 1990 Nobel Prize in Economic Sciences, Dr. William F. Sharpe, Chairman, Financial Engines, Inc., and Dr. Harry Markowitz, President, Harry Markowitz Company, contemplate the next 40 or 50 years in modern portfolio management. Listen now, and don't forget to subscribe to get updates each week for the Free To Choose Media Podcast.
Picture your investment portfolio as a carefully crafted puzzle and asset allocation as the key to solving it. It not only helps you navigate the treacherous waters of risk but fine-tunes your investments to harmonize perfectly with your financial dreams. In this episode, we take a deep dive into the art and science of portfolio management. Discover the intricacies of portfolio planning, execution, and maintenance as we dissect this critical aspect of wealth management. We unpack asset allocation with a focus on the stocks-to-bonds ratio, a crucial decision that balances the quest for maximum returns with the need for stability. We uncover the dangers of volatility and behavioural risks and explore strategies to safeguard your financial health. Tuning in, you'll hear how assessing your risk tolerance and automating tasks can lead to a well-crafted portfolio (and why we suggest using a portfolio manager). We also guide you through the maze of asset allocation options and the vital steps for effective portfolio maintenance. Whether you're a seasoned investor or just beginning your financial journey, this episode will equip you with the knowledge you need to navigate the complexities of portfolio management with confidence, so be sure to tune in for expert insights, practical strategies, and actionable advice that will empower you to make informed decisions about your financial health! Key Points From This Episode: Portfolio planning basics, an overview of risk, and the goal of asset allocation. (0:03:55) Unpacking the concept of ‘optimal portfolios' and why it is not achievable. (0:08:07) Essential asset allocation aspects, the role of human capital, and strategies to manage risk. (0:14:13) Individualized job skills and their impact on asset allocation in the broader economy. (0:20:41) How social capital plays into asset allocation from an investment standpoint. (0:24:54) Risk expected return, correlation of assets in a portfolio, and the different types of risk that should be considered. (0:28:25) Using historical returns for forecasting expected returns and the nuanced ways that behaviour drives investment decisions. (0:36:03) Applying asset allocation principles to construct a diversified, market-efficient portfolio (plus some common pitfalls to avoid). (1:04:04) Trade-offs of a less volatile portfolio and a framework for risk tolerance calculation. (1:19:13) Fundamentals of good portfolio maintenance and how to protect your investments. (1:34:45) Navigating portfolio execution errors and the portfolio pyramid. (1:50:36) Closing comments and important takeaways from the episode. (1:56:32) Links From Today's Episode: Benjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ Benjamin on X — https://twitter.com/benjaminwfelix Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/ Dr. Mark Soth (The Loonie Doctor) — https://www.looniedoctor.ca/ Dr. Mark on X — https://twitter.com/LoonieDoctor Rational Reminder Podcast Episode 100: Professor Kenneth French — https://rationalreminder.ca/podcast/100 Rational Reminder Podcast Episode 224: Professor Scott Cederburg — https://rationalreminder.ca/podcast/224 Rational Reminder Podcast Episode 258: Professor Meir Statman — https://rationalreminder.ca/podcast/258 Rational Reminder Podcast Episode 260: Professor James Choi — https://rationalreminder.ca/podcast/260 Rational Reminder Podcast Episode 262: Professor Francisco Gomes — https://rationalreminder.ca/podcast/262 Rational Reminder Podcast Episode 263: A Tribute to Harry Markowitz — https://rationalreminder.ca/podcast/263 Morningstar | ‘Mind the Gap' — https://www.morningstar.com/lp/mind-the-gap ‘Long-Horizon Losses in Stocks, Bonds, and Bills: Evidence from a Broad Sample of Developed Markets' — https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3964908 Vanguard Investor Questionnaire — https://investor.vanguard.com/tools-calculators/investor-questionnaire
Tauche mit uns ein in die Geschichte der modernen Portfoliotheorie. Felix beleuchte in diesem Coffee Break die bahnbrechenden Arbeiten zweier Ökonomen: Fischer Black und Robert Litterman. Die Pioniere – Fischer Black und Robert Litterman: Im Jahr 1990 veränderten Black und Litterman die Welt der Finanzen mit ihrem revolutionären Black-Litterman-Modell. Vor dem Black-Litterman – Die Mean-Variance-Optimierung: Um die Bedeutung des Black-Litterman-Modells zu verstehen, werfen wir einen Blick auf die Zeit vor seiner Entstehung. Die damals gängige Mean-Variance-Optimierung von Harry Markowitz hatte ihre Schwächen, insbesondere bei der Berechnung erwarteter Renditen und der Empfindlichkeit gegenüber kleinen Änderungen. Die Wende mit Black-Litterman: Das Black-Litterman-Modell brachte eine bahnbrechende Veränderung, indem es das Gleichgewichtsportfolio als Ausgangspunkt für die Portfoliooptimierung nutzte. Dies minimierte Unsicherheiten bei erwarteten Renditen und ermöglichte es, individuelle Meinungen und Erwartungen der Anleger zu integrieren. Über True Wealth True Wealth AG ist die führende digitale Vermögensverwaltungsplattform mit Sitz in Zürich, Schweiz. Wir bieten transparente und kosteneffiziente Anlagestrategien für Privatanleger mit Wohnsitz in der Schweiz, die eine moderne digitale Vermögensverwaltungslösung suchen. Säule 3a inbegriffen mit 0% Verwaltungsgebühr. Jetzt mehr erfahren.
With the recent passing of Harry Markowitz, we wanted to take this opportunity to spend some time honoring this giant of financial economics. Joining us on today's episode is our friend Alex Potts, who shares some of his touching memories of Harry, and talks about the unmistakable impact he had on the field. Harry is commonly viewed as the father of modern portfolio theory but also might be considered the grandfather of behavioural finance and a huge proponent of intelligent diversification. Alex graciously shares the nine lessons he learned from Harry, a few 'Harryisms' and some fond and surprising anecdotes from the time he spent with the man. Following this, we welcome Edward Goodfellow to the show to explore his new book, 7 Steps to A Better Portfolio. Edward is a fellow Canadian financial advisor, and we get to hear from him about the motivations for his book, its intended audience, and his insight into a host of central and familiar themes that we deal with on the show, so join us to hear it all. Key Points From This Episode: Looking back on the irreplaceable contributions of Harry Markowitz. (0:05:24) Alex talks about reaching out and meeting Harry in 2010. (0:10:00) Harry's amazing work ethic, unusual approach to problem-solving, and the nine lessons that Alex learned from him. (0:14:23) Edward shares his motivations for writing 7 Steps to A Better Portfolio, the questions that gave it structure, and its intended audience. (0:25:53) Understanding math and emotion, the four questions to ask before investing, and dangerous investment personalities and influencers. (0:29:39) Categorizing the different types of risk we encounter as investors, and the role of predictions and expectations. (0:35:41) Charting the evolution of a strategy over time, how to reassess and determine risk tolerance, and evaluating performance. (0:38:06) Edward describes different types of active and passive investing and the seven steps from his book. (0:40:26) Comparing financial science and active management research, and how to manage strategy risk. (0:49:42) How Edward looks at the value of financial advice and his biggest takeaway from writing the book. (0:52:58) The best way to approach figuring out the contradictions in the world of finance. (0:54:24) Today's after-show featuring listener reviews, community updates, and future episode guests. (0:56:20) Participate in our Community Discussion about this Episode: https://community.rationalreminder.ca/t/episode-263-a-tribute-to-harry-markowitz-with-alex-potts-7-steps-to-a-better-portfolio-with-edward-goodfellow-discussion-thread/24528 Book From Today's Episode: 7 Steps to A Better Portfolio — http://www.7stepstoabetterportfolio.com/ Links From Today's Episode: Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Shop Merch — https://shop.rationalreminder.ca/ Join the Community — https://community.rationalreminder.ca/ Follow us on Twitter — https://twitter.com/RationalRemind Follow us on Instagram — @rationalreminder Benjamin on Twitter — https://twitter.com/benjaminwfelix Cameron on Twitter — https://twitter.com/CameronPassmore Alex Potts — https://buckinghamstrategicwealth.com/people/alex-potts Edward Goodfellow — https://www.pifinancialcorp.com/advisor/edward-goodfellow
En este episodio especial de Inversapiens, rendimos homenaje al fallecido profesor de finanzas Harry Markowitz, un pionero en el campo de la inversión moderna. Exploraremos en profundidad su valioso aporte relacionado con los beneficios de la diversificación en las carteras de inversión. Descubre cómo la teoría de Markowitz cambió la forma en que los inversores perciben y abordan el riesgo y el rendimiento. Exploraremos cómo su enfoque en la diversificación de activos ha sido fundamental para proteger y mejorar el desempeño de las carteras en diferentes condiciones de mercado. A lo largo del episodio, discutiremos cómo aplicar los conceptos de Harry Markowitz en tu estrategia de inversión. Aprenderás cómo combinar activos de manera inteligente y cómo equilibrar riesgo y rendimiento para alcanzar tus objetivos financieros a largo plazo. Únete a nosotros en este emotivo episodio mientras honramos la legendaria contribución de Harry Markowitz y descubrimos cómo su visión ha impactado profundamente en la forma en que invertimos. ¡Prepárate para fortalecer tus habilidades como inversor y mejorar tu comprensión de la diversificación en el mundo de las finanzas! Recuerda utilizar el hashtag #Inversapiens al compartir el episodio y unirte a la conversación. ¡Esperamos que disfrutes de este homenaje y que encuentres inspiración en la sabiduría de Harry Markowitz para enriquecer tus decisiones de inversión! . . . . . APRENDE A GANAR DINERO EN LOS MERCADOS FINANCIEROS https://inversapiens.com/kit-gratuito/ Descarga un kit con Cursos online y Guías Prácticas 100% GRATIS para ganar dinero invirtiendo tu dinero en los mercados financieros.
Markowitz, a titan of finance who won the 1990 Nobel prize in economics, died last month. He showed, in a mathematically rigorous way, that diversification could bring higher returns without higher risk. Alex Scaggs joins Ethan to explain how Markowitz's work led to a way of thinking that has become ubiquitous in modern finance (and that has spawned legions of haters).Also, we go short economic forecasting and long Beyonce.Links:- Read Alex Scaggs's Markowitz obit in the FT.For a free 90-day trial to the Unhedged newsletter go to: https://www.ft.com/unhedgedofferFollow Ethan Wu (@ethanywu) and Katie Martin (@katie_martin_fx) on Twitter. You can email Ethan at ethan.wu@ft.com.Read a transcript of this episode on FT.com Hosted on Acast. See acast.com/privacy for more information.
In this Episode, James Parkyn & François Doyon La Rochelle review the latest eBook authored by James Parkyn titled Investing Life Skills for Early Savers. This eBook is available on the Capital topics website and in our Team's section on the PWL Capital website and will provide important life skills that will serve early savers on the road of making smart money decisions. eBook: Investing Life Skills for Early Savers - PWL Capital Read The Script: Introduction: François Doyon La Rochelle: You're listening to Capital Topics, episode #54! This is a monthly podcast about passive asset management and financial and tax planning ideas for the long-term investor. Your hosts for this podcast are James Parkyn and me François Doyon La Rochelle, both portfolio managers with PWL Capital. In this episode, we will review the latest eBook authored by James titled INVESTING LIFE SKILLS FOR EARLY SAVERS. Enjoy! Investing Life Skills for Early Savers : François Doyon La Rochelle: In today's Podcast, we will cover only one Topic which is a Review of the latest eBook Authored by you James titled INVESTING LIFE SKILLS FOR EARLY SAVERS. This ebook is available on the Capital Topics website and in our Team's section on the PWL Capital website. This has been a major effort and, in our Team, we made a strategic decision a few years back to add Next Generation clients to our Practice which includes the children of our current clients. James Parkyn: Yes, this has been a major undertaking as these younger clients are, in many cases, in the early stages of learning about saving and investing. In some cases, their thinking and experience are surprisingly advanced. In the case of the children of our clients, the parents were very happy we are undertaking this initiative. For them, it is part of their family values to help them develop what they consider to be an essential life skill going forward in their lives. Many of them also realize they wish they had started much younger than they did. François Doyon La Rochelle: For our Listeners, this is an eBook format, so it is relatively short at 28 pages with a lot of pictures and graphic illustrations and, is meant to be an easy jargon-free read. James, what is the main message you are trying to get across to Early Savers? James Parkyn: My main message is about the importance of starting early. It is a life skill that will serve you well on the road of life and will give you the confidence to make smart money decisions. Just to be clear for our listeners, what we mean by 'Life Skills' are the skills you need to make the most out of life. Any skill that is useful in your life can be considered a life skill. Early savers need to make this a high priority. François Doyon La Rochelle: You have had a lot of meetings with Early Savers over the last few years and what did you learn? James Parkyn: First off, I had to connect with them, so I decided to start the conversation from the vantage point of “Start with Why”. The idea comes from Author Simon Sinek who wrote a highly regarded book on the topic. François Doyon La Rochelle: What else resonates for them? James Parkyn: Well, I always like to connect with anecdotes about music. I mention the song “Time” by Pink Floyd from the seminal album “Dark Side of the Moon published in the early 1970s”. François Doyon La Rochelle: Ok, but this music is from their Parents' generation. There is another song on that album called “Money”, but the lyrics are mostly political. James Parkyn: To my surprise, many know Pink Floyd and the song. What I like about the lyrics from the song “Time” is that they convey a key message about the importance of starting early. I suspect the Band probably did not realize it when they wrote the words but somehow, they related a fundamental lesson about learning Investing Life Skills early. François Doyon La Rochelle: What do the lyrics say? James Parkyn: “Ticking away the moments that make up a dull day. Fritter and waste the hours in an offhand way. Kicking around on a piece of ground in your hometown. Waiting for someone or something to show you the way. Tired of lying in the sunshine, staying home to watch the rain. You are young and life is long, and there is time to kill today. And then one day you find ten years have got behind you. No one told you when to run, you missed the starting gun.” François Doyon La Rochelle: Wow, that's incredible how relevant the message is to our Topic. This new eBook is trying to help Early Savers to understand the importance of starting now. There will be no one to fire a starting gun to tell you to start learning and investing. James Parkyn: Exactly Francois. For me personally the joy of seeing the light go on about Investing in Life Skills is because they realize the concepts are really “accessible”. François Doyon La Rochelle: I like your choice of the word “Accessible” because it is very empowering to know and really feel “I can do this!”. So, James let's get into the meat of the eBook content. What are the Life Skills Early Savers need to develop? James Parkyn: We cover seven Investing Life Skills. The first Life Skill is Getting started. Investing in some Early Savers can be scary: “Where do I start? It is so complicated!” Even worse, some Early Savers may wonder “Why do I need to pay attention now? I have all my life ahead of me!” When you're starting, it's not easy to find the best route to achieving the financial goals you have set for yourself and your family. There are so many competing priorities to consider and only limited resources to commit to any one of them. François Doyon La Rochelle: Adding to the challenge in today's wired world with the internet and social media ever present, Early Savers have way too much information at their fingertips and in fact, what they are seeking is real knowledge and practical information that they can use to get started and to help them on this new journey they are starting. James Parkyn: I agree which is why we explain key concepts to help Early Savers take the first critical steps on their financial journey. And yes, Francois, we hope they will learn how to make good decisions and avoid major mistakes. François Doyon La Rochelle: Getting started is all about explaining the magic of compound interest. Maybe you can explain to our listeners what compound interest is. James Parkyn: Compounding is no small thing. Albert Einstein is reputed to have called it the eighth wonder of the world. It's the interest on the interest you've already earned. In other words, compounding is the money you earn on your original investment, plus the money you earn on the returns already accumulated over time. François Doyon La Rochelle: There's another important reason for getting started early on your investing journey. You will be getting into the habit of saving while learning the principles of investing and building your confidence. James Parkyn: Precisely! When you have lived through many bear markets and as you know Francois, we have had four since 2000, then your experience as an Investor with a Long-Term Mindset you will be less likely to panic sell because you have a well-engineered diversified portfolio is that you will recover and go on to grow in value. François Doyon La Rochelle: What's a good way to get started? James Parkyn: Early Savers should set up an automatic withdrawal from their bank account that goes directly to an investment account. That's called paying yourself first (before all your other expenses), and it works because you naturally adjust your spending to the amount of money you have on hand. François Doyon La Rochelle: James let's discuss the second Life Skill Early Savers need to develop: Managing your Human Capital. James Parkyn: Many people are unaware of their most valuable asset. It remains hidden in plain sight because it's taken for granted. What is this asset? Your potential to generate income over your lifetime. It's called your human capital and can be defined as the present value of all your future earnings. For most people, that works out to a huge number, especially if you're young. Your human capital is even more valuable because it's a hedge against inflation. Earnings tend to rise with the cost of living. François Doyon La Rochelle: James the term “present value of all your future earnings” is jargon for many Listeners and Early Savers. James Parkyn: Human capital is the present value of all future wages from working. You can increase your human capital by continuing your education or going for on-the-job training. Think of all your future expected earnings that you will take home as compensation up to the time you will retire from working. Then, estimate what it would be worth as a lump sum of investment capital. François Doyon La Rochelle: As it grows, you also need to protect your human capital in the same way you safeguard other important assets. James Parkyn: If you're like most people, you'll be rich in human capital when you start out in your working life, but poor in financial capital. As you move through your career, your goal should be to convert your human capital into financial capital by earning, saving and making good investment decisions. Both forms of capital are important, give them both the attention they deserve. François Doyon La Rochelle: When you add into the mix the compound return on both Human and Financial Capital that is how you get to financial independence however you may define it. James let's now discuss the third skill Early Savers need to develop: Cultivating an Investor Mindset. James Parkyn: Many people approach investing as if it were a game of chance that can be won by placing bets on the latest hot stock or investment fad. Blackrock Asset Management surveyed in 2015, 51% of Canadians said at the time that they believe investing is like gambling. While investing and gambling both involve risking money in hopes of realizing a financial gain, that's where the similarity ends. Investing – when done right – is about buying assets that have a positive expected return thanks to the income they pay and/or their long-term capital appreciation. François Doyon La Rochelle: We have covered this concept in a past Podcast. The difference between Investing and Speculating sometimes is a question of perspective and timeline. Speculation often means you expect short-term easy gains. This is a question that challenges even us professionals. James Parkyn: I agree. But for Early Savers, the Life Skill to develop is patiently sticking to a broadly diversified portfolio that reflects their risk tolerance and accepting that it may not produce the excitement of trying to hit the jackpot on a hot stock or a cryptocurrency. But they shouldn't be investing for thrills. Your aim should be to achieve your long-term goals, and that's not something to gamble on. I have heard the expression it is ok to lose money when you are young you can make it up later in life. I hate that and tell Early Savers to beware as if you look at the loss based on the effect of compounding over multiple decades of your lifespan then the loss is massively larger. François Doyon La Rochelle: Next up is the fourth Life Skill Early Savers need to develop: Keeping Your Eye on the Long Term. What is your message about this Life Skill? James Parkyn: Successful investors make consistent, smart money decisions and stick with them through market ups and downs over a period of decades. That requires discipline, an essential skill to learn early in your investing life. Develop your Plan and stick to it. François Doyon La Rochelle: This is about not falling prey to the noise in the financial media and trading based on short-term capital market events and economic news. We have talked often on our Podcast about avoiding “market timing”. Researchers have found it's one of the worst wealth-destroying mistakes you can make. A sharp downturn in the markets can be particularly difficult for some people to stomach. They talk themselves into the idea that they can pull out now and get back in when things get better. James Parkyn: However, trying to time the market presents at least two problems. First, if you sell now, when will you know it's safe to buy back into the market? Second, you risk missing out on gains while you're on the sidelines and that can have a huge impact on your long-term returns. While it can be challenging, the best investment strategy – as supported by decades of academic research – is to hold a portfolio of broadly diversified, passively managed investments through good times and bad. Why passively managed? Because research clearly shows that most active fund managers underperform their index benchmark in any given year. François Doyon La Rochelle: The fifth Life Skill Early Savers need to develop: Understanding Human Biases. James, what do you say to Early savers about the psychological aspects of Investing? James Parkyn: I tell them they need to understand how their basic human instincts can cause them to make poor financial decisions. We all fall prey to mental and emotional biases that can lead to serious investing errors. François Doyon La Rochelle: To control the influence of mental and emotional biases, you must first be aware of them and then guide yourself back to rational thinking and good decision-making processes. What are some of the key biases? James Parkyn: Behavioral economics has been a huge growth area with two major Nobel Prizes being awarded to academics for their work in the past 20 years or so. There is an amazing amount of research that deals with Behavioral biases. I highlight the top 4 that I believe Early Savers should watch out for in your thinking about investments. Recency Bias: This is the tendency to give greater importance to events that have occurred in the recent past. Recency bias can cause you to depart from your investment plan to jump on a hot market trend or sell during a market downturn. Over-Confidence: It's common for people to develop unwarranted confidence in their abilities, including their ability to make exceptional profits in financial markets. Overconfidence can lead investors to make risky bets based on a misguided belief in their ability to predict the future. Confirmation Bias: This occurs when investors seek out information that confirms their point of view and discount divergent opinions. Loss Aversion: Behavioral finance researchers have determined that people feel the pain of a loss about twice as strong as the pleasure they get from an equivalent gain. Loss aversion is another bias that can distort your decision-making by causing you to prioritize avoiding losses over earning gains. François Doyon La Rochelle: Good investment advice and processes such as annual portfolio reviews, automatic contributions, and periodic portfolio rebalancing can help Early Savers keep their emotions in check and keep them on track with their Long-Term Investment plan. The sixth Life Skill Early Savers need to develop: Diversifying to Reduce Your Risk. This is another topic we address often on our Podcast. What is the message of this Life Skill? James Parkyn: Diversifying your portfolio by holding many investments in different markets is a fundamental strategy for successful investing. Noble Prize-winning economist Harry Markowitz famously described it as “the only free lunch in finance.” François Doyon La Rochelle: Markowitz demonstrated that when you combine assets that perform differently over time you lower the overall riskiness of your portfolio without reducing expected returns. James Parkyn: It comes down to not putting all your eggs in one basket. When you own just a few stocks, the failure of any one of those companies can lead to a permanent loss of your savings. But when you own many stocks—ideally all of them in a given market— the poor performance of some will be offset by the better performance of others. François Doyon La Rochelle: A word of caution: This doesn't mean you will never lose, but your gains and losses will reflect those of the overall market. You've removed what's known as unsystematic risk – the risk unique to a specific company or industry. James Parkyn: The same principle applies to holding different asset types such as stocks, bonds, and real estate. Each produces different returns in any given period and by combining them in a portfolio you reduce its riskiness. François Doyon La Rochelle: It may come as a surprise, but research shows that many investors hold woefully under-diversified portfolios. James Parkyn: Fortunately, Early Savers can avoid this basic investing error by owning passively managed funds that allow you to broadly diversify at a very low cost. François Doyon La Rochelle: The seventh and last Life Skill Early Savers need to develop: Controlling Your Emotions. James, how is this Life Skill different compared to learning about Human cognitive biases? James Parkyn: Great Question Francois. As you said earlier, here is the message I want to convey is to pay attention to how you react emotionally to market volatility. Among the most important of these is to tune out media noise about the day-to-day movements in the markets and focus instead on your long-term Investment plan. It should have asset allocation targets that reflect your objectives and risk tolerance. As markets move up or down, you periodically rebalance your portfolio back to your target asset allocations and keep your faith that the process works overtime. François Doyon La Rochelle: As we have stated before, The Financial Services industry and the Financial Media promote active management which pushes us to do a lot of trading. Think of all the industry advertising showing someone in front of a trading screen of stock quotes. Unfortunately, many Investors equate trading with adding value. James Parkyn: I have a great quote from a longtime collaborator of Warrant Buffett, Louis Simpson, who oversaw investments at Berkshire Hathaway's giant GEICO insurance subsidiary. He once said: “We do a lot of thinking and not a lot of acting. A lot of investors do a lot of acting and not a lot of thinking.” For me, this, in a nutshell, reflects how we manage our clients' money and how we are different from most of the financial services industry. We buy very carefully; we hold and defer tax and rebalance when it makes sense to do so. We do this all while sticking to the Clients' well-thought-out plans. François Doyon La Rochelle: I love this quote too. Louis A. Simpson was one of Warren Buffett's favorite fund managers and a one-time potential successor. He was much lesser known than Buffett or Charlie Munger. Sadly, he passed away at the beginning of 2022 at age 85. We should point out to our Listeners that by acting a lot he means trading a lot. So now, let's get back to the Investing Life Skill of Controlling Your Emotions. When markets go up it's relatively easy to keep your emotions in check for most investors when your portfolio goes up every day. James Parkyn: Down markets are a fact of life when you invest. Taking a controlled amount of risk is what allows you to earn returns and build your wealth. However, falling markets can create anxiety and pressure to act which can feel overwhelming at times. This is when investors must control their emotions to avoid making errors that will lead to a permanent loss of capital. François Doyon La Rochelle: All Investors must guard against the fact their thoughts can deceive them. You may think you're making rational decisions when in fact your actions are being driven by fear. That's why you should prepare yourself for market downturns by striving to recognize when you're feeling under stress and cultivating strategies to deal with unhealthy emotions. James, you also provide recommendations for Books. What do you recommend? James Parkyn: First, I recommend that the Early Savers read our eBook “7 Deadly Sins of Investing” that we published in 2021. It is in some ways a companion piece to this new eBook. I also recommend two must-reads for Early Savers who want to develop a deeper level of knowledge: The Psychology of Money by Morgan Housel: This is a very popular book and it is very useful to both Professional Investors and Individuals. award-winning author Morgan Housel shares 19 short stories exploring the strange ways people think about money and teaches you how to make better sense of one of life's most important topics. Think, Act, and Invest Like Warren Buffett by Larry E. Swedroe Think, act and invest like the best investor out there: Warren Buffett. While you can't invest exactly like he does, Think, Act, and Invest Like Warren Buffett provides a solid, sensible investing approach based on Buffett's advice regarding investment strategies. François Doyon La Rochelle: James, you also provide recommendations for Books for Parents. What Books do you recommend for them? James Parkyn: I recommend two very good but different books: It Makes Total Cents by Tom Henske. He is an American author. Some material in this book is specific to Americans Investors and reflects US tax laws. It Makes Total Cents (spelled with a “c” as a play on words) is a short, easy-to-read bite-size guide to help parents. This concise book is meant to be read a chapter per month covering the 12 most important money topics that a child should understand before going to university or college. The Wisest Investment by Robin Taub. She is a Canadian and her book is about teaching your kids to be responsible, independent, and money smart. Robin Taub lays out a roadmap for teaching your kids about money. Financial literacy has been a long-ignored subject and the result has been generation after generation entering adulthood without a grasp of money basics. This eventually leads to unnecessary stress in adulthood and ultimately causes stress leading to health issues. François Doyon La Rochelle: James, you also provide recommendations for Books for Parents. What Books do you recommend for them? Conclusion: François Doyon La Rochelle: So, this is it for today's podcast Investing Life Skills for Early savers. Thank you, James Parkyn for sharing your expertise and your knowledge. James Parkyn: You are welcome, Francois. François Doyon La Rochelle: That's it for episode #54 of Capital Topics! Do not forget, if you would like to submit questions or suggestions for the show, please email us at: capitaltopics@pwlcapital.com Also, if you like our podcast, please share it when with family and friends and if you have not subscribed to it, please do. Again, thank you for tuning in and please join us for our next episode to be released on August 2nd. See you soon!
Dans cet épisode, James Parkyn et François Doyon La Rochelle passent en revue le dernier livret électronique écrit par James Parkyn intitulé Compétences en matière d'investissement pour les jeunes épargnants. Ce livret électronique est disponible sur le site Web de Sujet Capital et dans la section de notre équipe sur le site Web de PWL Capital. Il fournit d'importantes connaissances pratiques qui aideront les jeunes épargnants à prendre les bonnes décisions financières. Livret électronique: https://www.pwlcapital.com/fr/?p=17970 Lire le script : Introduction : François Doyon La Rochelle: Bienvenue à Sujet Capital, un Balado mensuel à propos de la gestion passive de portefeuille et de la planification financière et fiscale pour les investisseurs à long terme. Vos hôtes pour ce Balado sont James Parkyn et moi-même François Doyon La Rochelle, tous deux gestionnaires de portefeuilles avec PWL Capital. Au programme aujourd'hui pour l'épisode #54 : Dans cet épisode, nous passerons en revue le dernier livret électronique écrit par James intitulé - Compétences en matière d'investissement pour les jeunes épargnants. Bonne écoute ! Compétences en matière d'investissement pour les jeunes épargnants : François Doyon La Rochelle : Dans le podcast d'aujourd'hui, on va aborder un seul sujet, on va discuter du dernier livret électronique que tu as écrit James qui est intitulé Compétences en matière d'investissement pour les jeunes épargnants. Ce livret est disponible sur notre site Sujet Capital et aussi sur la page de notre équipe au sein du site PWL Capital. Il fait partie d'un effort important dans notre équipe car on a pris une décision stratégique il y a quelques années pour ajouter des clients de la nouvelle génération à notre pratique, ce qui inclut les enfants de nos clients actuels. James Parkyn : Oui, effectivement, il s'agit d'un gros mandat, car ces jeunes clients en sont, pour plusieurs, seulement aux premiers stades de l'apprentissage de l'épargne et de l'investissement. Pour d'autres, on voit que leur réflexion et leur expérience sont étonnamment avancées. Dans le cas des enfants de nos clients, les parents sont en fait très heureux que nous entreprenions cette initiative. Pour eux, ça fait partie des valeurs familiales de les aider à développer ce qu'ils considèrent comme une compétence essentielle pour la suite de leur vie. Beaucoup d'entre eux réalisent également qu'ils auraient aimé commencer beaucoup plus tôt. François Doyon La Rochelle : Pour nos auditeurs, il s'agit d'un livret électronique, donc relativement court (28 pages), avec beaucoup d'images et d'illustrations graphiques, qui se veut facile à lire et sans trop de jargon. James, quel est le message principal que tu veux essayer de faire passer aux jeunes épargnants ? James Parkyn : Mon message principal porte sur l'importance de commencer tôt. C'est une compétence qui vous servira sur tout au long de votre vie et vous donnera la confiance nécessaire pour prendre des décisions financières intelligentes. Pour que les choses soient claires pour nos auditeurs, nous entendons par "compétences pour la vie" les compétences dont vous avez besoin pour tirer le meilleur parti de la vie. Toute compétence utile dans la vie peut être considérée comme une compétence de vie. Les jeunes épargnants doivent en faire une priorité. François Doyon La Rochelle : James tu as eu de nombreuses rencontres avec des jeunes épargnants au cours des dernières années, qu'est-ce que tu as appris ? James Parkyn : Tout d'abord, je devais connecter avec eux, et j'ai donc décidé d'entamer la conversation en partant du point de vue "Start with Why" (Commencez par le pourquoi). L'idée de « Start with the Why » vient de l'auteur Simon Sinek, qui a écrit un livret bien connu sur le sujet. François Doyon La Rochelle : Qu'est-ce qui résonne avec eux ? Comment fais-tu pour les intéresser ? James Parkyn : J'aime toujours raconter des anecdotes sur la musique. Je mentionne la chanson "Time" de Pink Floyd, tirée de l'album phare "Dark Side of the Moon" publié au début des années 1970. François Doyon La Rochelle : Un classique, mais c'est surtout de la musique de la génération de leurs parents. Il y a aussi une autre chanson sur cet album qui s'appelle "Money", mais les paroles sont surtout politiques. James Parkyn : À ma grande surprise, beaucoup de jeune connaissent Pink Floyd et la chanson. Ce que j'aime vraiment dans les paroles de la chanson "Time", c'est qu'elles transmettent un message clé sur l'importance de commencer tôt. Je soupçonne le groupe de ne pas s'en être rendu compte lorsqu'il a écrit ces paroles, mais d'une manière ou d'une autre, ils ont relayé un message fondamental pour les jeunes épargnants. François Doyon La Rochelle : C'est quoi le message, qu'est-ce que les paroles disent ? James Parkyn : Traduction libre ici des paroles. "Faire défiler les moments qui composent une journée ennuyeuse. Gâcher les heures avec désinvolture. Se trainer sur un bout de terrain dans sa ville natale. Attendre que quelqu'un ou quelque chose vous montre le chemin. Fatigué de se prélasser au soleil, rester à la maison pour regarder la pluie. Vous êtes jeune, la vie est longue et vous avez du temps à tuer aujourd'hui. Et puis un jour, vous vous apercevez que dix ans se sont écoulés derrière vous. Personne ne vous a dit quand courir, vous avez raté le coup de départ". François Doyon La Rochelle : C'est incroyable à quel point le message est pertinent pour notre sujet. Ce nouveau livret électronique a pour but d'aider les jeunes épargnants à comprendre l'importance de commencer dès maintenant. Il n'y aura personne pour donner le départ, pour vous dire de commencer à apprendre et à investir. James Parkyn : Exactement François. Pour moi, c'est une vraie joie de voir la lumière s'allumer, de voir que les jeunes réalisent que les concepts sur l'investissement que j'apporte sont vraiment "accessibles". François Doyon La Rochelle : J'aime ton choix du mot "accessible" parce que c'est très stimulant pour les jeunes de savoir et de sentir qu'ils peuvent y arriver. James, entrons dans le vif du sujet. Quelles sont les compétences que les jeunes épargnants doivent développer ? James Parkyn : On couvre sept compétences en matière d'investissement. La première compétence est "Point de départ". Pour certains jeunes épargnants, l'investissement peut être effrayant : "Par où commencer ? C'est tellement compliqué !" Pire encore, certains jeunes épargnants peuvent se demander : "Pourquoi dois-je y porter attention maintenant ? J'ai toute la vie devant moi !" Lorsqu'on débute, ce n'est pas facile de trouver le meilleur moyen d'atteindre les objectifs financiers que l'on s'est fixés pour soi et pour sa famille. Il y a tant de priorités concurrentes à prendre en compte et les ressources à consacrer à l'une d'entre elles sont limitées. François Doyon La Rochelle : Je pense que les jeunes épargnants ont beaucoup trop d'informations à leur disposition dans le monde branché d'aujourd'hui, avec Internet et les médias sociaux qui sont omniprésents. En fait, je pense que ce dont ils ont besoin ce sont des connaissances réelles et des informations pratiques qu'ils peuvent utiliser pour démarrer et les aider dans ce nouveau voyage qu'ils commencent. James Parkyn : Je suis d'accord et c'est pourquoi on explique les concepts clés pour aider les jeunes épargnants à franchir les premières étapes critiques de leur parcours financier. Eh oui, François, on espère qu'ils apprendront à prendre les bonnes décisions et à éviter de faire des erreurs majeures. François Doyon La Rochelle : Dans la partie, pour commencer, tu expliques, James, la magie des intérêts composés. Peut-être que tu pourrais l'expliquer à nos auditeurs, c'est quoi les intérêts composés ? James Parkyn : Le concept des intérêts composés n'est pas une mince affaire. Albert Einstein l'a qualifié de huitième merveille du monde. C'est l'intérêt sur l'intérêt que vous avez déjà gagné. En d'autres termes, la capitalisation est l'argent que vous gagnez sur votre investissement initial, plus l'argent que vous gagnez sur les rendements déjà accumulés au fil du temps. François Doyon La Rochelle : Une autre raison importante qui justifie de commencer tôt votre parcours d'investisseur, c'est de prendre l'habitude d'épargner tout en apprenant les principes de base l'investissement et en renforçant votre confiance. James Parkyn : Précisément ! Lorsqu'on traverse de nombreux marchés baissiers, et comme tu le sais, François, on en a connu quatre depuis 2000, l'expérience acquise en tant qu'investisseur avec une mentalité à long terme fait en sorte que nous sommes moins enclin à vendre en panique. On apprend qu'un portefeuille diversifié et bien conçu va se rétablir et continuer à augmenter de valeur une fois la crise passé. François Doyon La Rochelle : Avec ton expérience James c'est quoi la meilleure façon de commencer ? James Parkyn : Les jeunes épargnants devraient mettre en place un retrait automatique de leur compte bancaire qui va directement dans un compte d'investissement. C'est ce qu'on appelle se payer en premier (avant toutes les autres dépenses), et ça fonctionne parce que vous adaptez naturellement vos dépenses au montant d'argent dont vous disposez après votre épargne. François Doyon La Rochelle : James pourrais-tu nous parler de la deuxième compétence que les jeunes épargnants doivent acquérir : Tu l'as appelé, gérer son capital humain. James Parkyn : De nombreuses personnes ne sont pas conscientes de leur actif le plus précieux. Il reste caché à la vue de tous parce qu'il est considéré comme acquis. Quel est cet actif ? C'est votre potentiel à générer des revenus tout au long de votre vie. Il s'agit de votre capital humain, que l'on peut définir comme la valeur actuelle de tous vos revenus futurs. Pour la plupart des gens, ça représente un chiffre énorme, surtout s'ils sont jeunes. Votre capital humain est d'autant plus précieux parce qu'il constitue une protection contre l'inflation. Ce que je veux dire par ça c'est que les revenus ont tendance à augmenter avec le coût de la vie. François Doyon La Rochelle : James, pourrais-tu expliquer ce qu'est la "valeur actuelle de tous vos revenus futurs". Je pense que c'est un peu du jargon pour nos auditeurs et les jeunes épargnants. James Parkyn : Le capital humain est la valeur actuelle de tous les salaires futurs provenant du travail. Vous pouvez augmenter votre capital humain en poursuivant vos études ou en suivant une formation en cours d'emploi. Pensez à tous les revenus futurs que vous percevrez en tant que rémunération jusqu'au moment où vous prendrez votre retraite et ensuite estimé ce que ça vaudrait comme somme forfaitaire pour du capital à investir. François Doyon La Rochelle : Au fur et à mesure qu'il se développe, vous devez également protéger votre capital humain de la même manière que vous protégez d'autres actifs importants. Comme une automobile ou une assurance habitation. James Parkyn : Si vous êtes comme la plupart des gens, vous serez riche en capital humain au début de votre vie professionnelle, mais pauvre en capital financier. Au cours de votre carrière, votre objectif devrait être de convertir votre capital humain en capital financier en gagnant de l'argent, en épargnant et en prenant de bonnes décisions en matière d'investissement. Les deux formes de capital sont importantes, accordez-leur l'attention qu'elles méritent. François Doyon La Rochelle : Si l'on ajoute à ça le rendement composé du capital humain et financier, c'est ainsi que l'on parvient à l'indépendance financière, quelle que soit votre définition personnelle. James, parlons maintenant de la troisième compétence que les jeunes épargnants doivent développer : Cultiver un état d'esprit d'investisseur. James Parkyn : De nombreuses personnes abordent l'investissement comme s'il s'agissait d'un jeu d'hasard, que l'on peut gagner en pariant sur le dernier titre à la mode ou la dernière tendance en matière d'investissement. Blackrock Asset Management a mené une enquête en 2015, et 51 % des Canadiens ont déclaré à l'époque qu'ils pensaient que l'investissement pour eux ressemblait à un jeu de hasard. Même si l'investissement et les jeux de hasard impliquent tous deux de risquer de l'argent dans l'espoir de réaliser un gain financier, la similitude s'arrête là. L'investissement - lorsqu'il est bien fait - consiste à acheter des actifs dont le rendement attendu est positif grâce aux revenus qu'ils génèrent et/ou à l'appréciation du capital à long terme. François Doyon La Rochelle : Nous avons abordé ce concept dans un podcast précédent. La différence entre investir et spéculer est parfois une question de perspective et de temps. La spéculation signifie souvent que l'on s'attend à des gains faciles à court terme. C'est quelque chose qui nous interpelle même nous les professionnels. James Parkyn : Je suis d'accord François. Mais pour les jeunes épargnants, le savoir-faire à développer est de s'en tenir patiemment à un portefeuille largement diversifié qui reflète leur tolérance au risque et d'accepter que cette philosophie d'investissement ne produise peut-être pas l'excitation de toucher le jackpot sur une action ou une crypto-monnaie à la mode. Ils ne devraient pas investir pour des sensations fortes. Votre but devrait être d'atteindre vos objectifs financiers à long terme, et ce n'est pas quelque chose avec lequel il faut jouer. J'ai déjà entendu dire qu'il n'était pas grave de perdre de l'argent quand on est jeune, car on peut se rattraper plus tard dans la vie. Je déteste cette façon de penser et je dis aux jeunes épargnants d'y penser à deux fois, car si l'on prend en compte l'effet de la capitalisation sur plusieurs décennies de l'argent perdu, la perte est beaucoup plus importante. François Doyon La Rochelle : On poursuit avec la quatrième compétence que les jeunes épargnants doivent acquérir : Garder le cap sur le long terme. James, c'est quoi ton message ? James Parkyn : Les investisseurs qui réussissent prennent des décisions financières cohérentes et intelligentes et s'y tiennent malgré les hauts et les bas du marché sur une période de plusieurs dizaines d'années. Cela exige de la discipline, une compétence essentielle à acquérir dès le début de votre vie d'investisseur. Élaborez votre plan d'investissement et respectez-le. François Doyon La Rochelle : Donc Il s'agit de ne pas se laisser piéger par le bruit des médias et de ne pas faire des transactions en fonction des événements à court terme sur les marchés financiers et des nouvelles économiques. On a parlé souvent dans notre podcast de la nécessité d'éviter le "market timing". Les académiciens ont déterminé que c'est une des pires erreurs qu'on peut faire pour détruire son patrimoine. Une forte baisse des marchés peut être particulièrement difficile à digérer pour certaines personnes. Ils se persuadent qu'ils peuvent sortir du marché maintenant et y revenir quand les choses iront mieux. James Parkyn : Cependant, essayer de prévoir le marché pose au moins deux problèmes. Premièrement, si vous vendez maintenant, quand saurez-vous qu'il est sûr de revenir sur le marché ? Deuxièmement, si vous vendez, vous risquez de rater des gains pendant que vous êtes sur la touche, ce qui peut avoir un impact considérable sur vos rendements à long terme. Bien que ça peut être difficile, la meilleure stratégie d'investissement, est de détenir un portefeuille d'investissements largement diversifiés et gérés passivement, dans les bons comme dans les mauvais moments. Pourquoi une gestion passive ? Parce que la recherche montre clairement que la plupart des gestionnaires de fonds actifs sous-performent leur indice de référence au cours d'une année donnée. François Doyon La Rochelle : La cinquième compétence à acquérir est de : Comprendre les biais comportementaux. James, qu'est-ce que tu dis aux jeunes épargnants sur les aspects psychologiques de l'investissement ? James Parkyn : Je leur dis qu'ils doivent comprendre comment leurs instincts humains fondamentaux peuvent les amener à prendre de mauvaises décisions financières. Nous sommes tous la proie de biais comportementaux et émotionnels qui peuvent nous conduire à de graves erreurs d'investissement. François Doyon La Rochelle : Pour contrôler l'influence des biais comportementaux et émotionnels, il faut d'abord en être conscient, puis revenir à une pensée rationnelle et à de bons processus de prise de décision. Quels sont les principaux biais ? James Parkyn : La finance comportementale est un domaine en plein essor, deux prix Nobel ont été décernés à des académiques pour leurs travaux dans ce domaine au cours des 20 dernières années. Il existe une quantité étonnante de recherches sur les biais comportementaux. Je mets en évidence les quatre principaux biais sur lesquels les jeunes épargnants devraient, selon moi, porter leur attention. Vous devrez vous protéger contre ces biais et d'autres biais cognitifs et émotionnels tout au long de votre vie d'investisseur. Biais de récurrence : Il s'agit de la tendance à accorder plus d'importance aux événements qui se sont produits dans un passé récent. Le biais de récence peut vous amener à vous écarter de votre plan d'investissement pour profiter d'une tendance haussière du marché ou pour vendre lors d'un repli du marché. L'excès de confiance : Il est fréquent que les gens développent une confiance injustifiée en leurs propres capacités, y compris en leur capacité à réaliser des profits exceptionnels sur les marchés financiers. L'excès de confiance peut conduire les investisseurs à faire des paris risqués sur la base d'une croyance erronée en leur capacité à prédire l'avenir. Biais de confirmation : Cela se produit lorsque les investisseurs recherchent des informations qui confirment leur point de vue et négligent les opinions divergentes. L'aversion aux pertes : Les chercheurs en finance comportementale ont déterminé que les gens ressentent la douleur d'une perte environ deux fois plus fortement que le plaisir qu'ils retirent d'un gain équivalent. L'aversion pour les pertes est un autre biais qui peut fausser votre prise de décision en vous amenant à privilégier l'évitement des pertes par rapport aux gains. François Doyon La Rochelle : Des bons conseils en matière d'investissement et des bonnes habitudes tels que l'examen annuel du portefeuille, les cotisations automatiques et le rééquilibrage périodique du portefeuille peuvent vous aider à maîtriser vos émotions et à maintenir votre plan d'investissement sur la bonne voie. James Parkyn : Diversifier son portefeuille en détenant un grand nombre d'investissements sur différents marchés est une stratégie fondamentale pour investir avec succès. L'économiste Harry Markowitz, lauréat du prix Nobel, l'a fameusement décrite comme "le seul repas gratuit en finance" ou « The only free lunch in finance » François Doyon La Rochelle : Effectivement, Markowitz a démontré qu'en combinant des actifs qui performent différemment au fil du temps, vous réduisez le risque global de votre portefeuille sans réduire les rendements attendus. James Parkyn : Il s'agit de ne pas mettre tous ses œufs dans le même panier. Lorsque vous ne possédez que quelques actions de compagnies dans votre portefeuille, la faillite d'une de ces compagnies peut entraîner une perte permanente de votre épargne. Alors que si vous possédez de nombreux titres - idéalement toutes les actions d'un marché donné - les mauvaises performances de certaines seront compensées par les meilleures performances des autres. François Doyon La Rochelle : Une petite mise en garde, Ça ne veut pas dire que vous ne perdrez jamais, mais que vos gains et vos pertes reflèteront celles du marché dans son ensemble. Vous avez éliminé ce que l'on appelle le risque non systématique, c'est-à-dire le risque propre à une entreprise, une compagnie, ou à un secteur spécifique. James Parkyn : Le même principe s'applique à la détention de différents types d'actifs tels que les actions, les obligations et l'immobilier. Chacun d'entre eux produit des rendements différents au cours d'une période donnée et en les combinant dans un portefeuille, vous en réduisez le risque. François Doyon La Rochelle : Ça peut surprendre, mais les études démontrent que de nombreux investisseurs détiennent encore des portefeuilles terriblement sous-diversifiés. James Parkyn : Heureusement, les jeunes épargnants peuvent éviter de faire cette erreur fondamentale en achetant simplement des fonds gérés passivement qui permettent une large diversification à un coût très faible. François Doyon La Rochelle : La septième et dernière compétence que les jeunes épargnants doivent acquérir est celle de : Contrôler ses émotions. C'est quoi la différence entre cette compétence et l'apprentissage des biais comportementaux ? James Parkyn : Excellente question, Francois. Le message que je veux faire passer ici encore une fois est qu'il faut faire attention à la façon dont on réagit émotionnellement à la volatilité des marchés. L'une des mesures les plus importantes est d'ignorer le bruit des médias concernant les mouvements quotidiens des marchés et de se concentrer plutôt sur un plan financier à long terme. Ce plan doit prévoir une répartition des actifs en fonction de vos objectifs et de votre tolérance au risque. Lorsque les marchés évoluent à la hausse ou à la baisse, vous rééquilibrez périodiquement votre portefeuille en fonction de votre allocation d'actifs cible et vous restez confiant dans le fait que le processus fonctionne à long terme. François Doyon La Rochelle : Comme on l'a déjà dit, le secteur des services financiers et les médias financiers encouragent la gestion active, ce qui nous pousse à faire beaucoup de transactions. Pensez à toutes les publicités du secteur montrant une personne devant un écran avec des côtes boursière et des graphiques. Malheureusement, de nombreux investisseurs associent faire des transactions à la création de valeur. James Parkyn : J'ai une excellente citation d'un collaborateur de longue date de Warrant Buffett, Louis Simpson, qui supervisait les investissements de la gigantesque filiale d'assurance GEICO de Berkshire Hathaway. Il a dit un jour : "Nous réfléchissons plus que nous n'agissons. Un grand nombre d'investisseurs agissent beaucoup et ne réfléchissent pas beaucoup". Pour moi, cette phrase reflète la façon dont nous gérons l'argent de nos clients et ce qui nous différencie de la plupart des acteurs du secteur des services financiers. Nous achetons avec beaucoup de soin, nous conservons et différons les impôts et nous rééquilibrons lorsque c'est pertinent. Nous faisons tout ça en respectant le plan d'investissement bien conçu de nos clients. François Doyon La Rochelle : J'aime aussi cette citation. Louis A. Simpson était l'un des gestionnaires de fonds préférés de Warren Buffett et, à un moment donné, un successeur potentiel. Il était beaucoup moins connu que Buffett ou Charlie Munger. Malheureusement, il est décédé au début de l'année 2022 à l'âge de 85 ans. Je devrai préciser ici pour nos auditeurs qu'en agissant beaucoup, il voulait dire en négociant beaucoup. Revenons maintenant à nos moutons. Lorsque les marchés sont à la hausse, il est relativement facile de contrôler vos émotions pour la plupart des investisseurs qui voit leurs portefeuilles prendre de la valeur de jour en jour. James Parkyn : Les marchés baissiers font partie de la vie d'un investisseur. C'est en prenant des risques contrôlés que l'on obtient des rendements et que l'on construit son patrimoine. Cependant, les marchés baissiers peuvent créer de l'anxiété et une pression à agir qui peut parfois sembler insurmontable. C'est à ce moment-là que les investisseurs doivent contrôler leurs émotions car c'est là qu'ils commettent le plus souvent des erreurs qui entraînent une perte permanente de capital. François Doyon La Rochelle : Vos pensées peuvent être trompeuses. Vous pouvez croire que vous prenez des décisions rationnelles alors qu'en réalité vos actions sont motivées par la peur. C'est pourquoi vous devez vous préparer aux baisses des marchés en vous efforçant de reconnaître les moments où vous vous sentez stressé pour que vous puissiez ensuite gérer vos émotions. James, tu recommande également des livres. Quels livres recommandes-tu ? James Parkyn : Tout d'abord, je recommande aux jeunes épargnants de lire notre livret électronique " les 7 péchés capitaux de l'investissement" que nous avons publié en 2021. Il s'agit en quelque sorte d'un complément à ce nouveau livret électronique. Je recommande également aux jeunes épargnants qui souhaitent approfondir leurs connaissances de lire deux ouvrages incontournables : The Psychology of Money (La psychologie de l'argent) par Morgan Housel : L'auteur primé Morgan Housel présente 19 histoires courtes explorant les étranges façons dont les gens pensent à l'argent et vous apprend à mieux comprendre l'un des sujets les plus importants de la vie. Think, Act, and Invest Like Warren Buffett (Pensez, agissez et investissez comme Warren Buffett) par Larry E. Swedroe : Warren Buffett. Bien qu'il soit impossible d'investir exactement comme lui, Think, Act, and Invest Like Warren Buffett propose une approche d'investissement solide et sensée, basée sur les conseils de Buffett en matière de stratégies d'investissement. François Doyon La Rochelle : James, quels livres recommandes-tu recommande pour les parents ? James Parkyn : Je recommande deux livres différents mais tout aussi bons : It Makes Total Cents de Tom Henske. Il s'agit d'un auteur américain. Certains éléments de ce livre sont spécifiques aux investisseurs américains et reflètent les lois fiscales américaines. It Makes Total Cents (épelé avec un "c" pour faire un jeu de mots avec le mot sense) est un guide court et facile à lire pour aider les parents. Ce livre concis est conçu pour être lu à raison d'un chapitre par mois et couvre les 12 sujets financiers les plus importants qu'un enfant doit comprendre avant d'entrer à l'université ou au collège. The Wisest Investment de Robin Taub. Elle est canadienne et son livre vise à enseigner à vos enfants à être responsables, indépendants et intelligents en matière d'argent. Robin Taub propose une feuille de route pour enseigner l'argent à vos enfants. L'éducation financière a longtemps été un sujet ignoré et il en résulte que, génération après génération, les enfants entrent dans l'âge adulte sans maîtriser les bases de l'argent. Cela conduit à un stress inutile à l'âge adulte et, en fin de compte, à des problèmes de santé. Conclusion : François Doyon La Rochelle : Voilà pour le podcast d'aujourd'hui intitulé Compétences en matière d'investissement pour les jeunes épargnants. Merci James Parkyn d'avoir partagé ton expertise et ton savoir. James Parkyn : il m'a fait plaisir Francois. François Doyon La Rochelle : Hé bien c'est tout pour ce 54ième épisode de Sujet Capital ! Nous espérons que vous avez aimé. N'hésitez pas à nous envoyer vos questions et suggestions. Vous pouvez nous joindre par courriel à: sujetcapital@pwlcapital.com De plus, si vous aimez notre podcast, partagez-le avec votre famille et vos amis et si vous n'y êtes pas abonné, faites-le SVP. Encore une fois, merci d'être à l'écoute et joignez-vous à nous pour notre prochain épisode qui sortira le 2 aout. A bientôt!
Hi everyone. We're taking the week off for the 4th of July holiday, but we wanted to use this week's episode to honor Nobel Prize-winning economist Harry Markowitz, who recently passed away at the age of 95. Professor Markowitz is a giant of finance, someone who put diversification and Modern Portfolio Theory on the map, with his research transforming the way we allocate and invest our assets. While we didn't have the opportunity to interview Professor Markowitz for the podcast, we were able to chat recently with someone who had interviewed him: author and financial researcher Dr. Andrew Lo. Dr. Lo recently published a book titled “In Pursuit of the Perfect Portfolio,” in which he profiled some of the leading figures in academic research and finance. None stood taller than Professor Markowitz, whom Dr. Lo discusses at length in this interview we aired in February of 2022. We think you'll enjoy it. Thanks so much for listening and see you in a week. Have a happy holiday.Our guest this week is Dr. Andrew Lo. Dr. Lo is the Charles E. & Susan T. Harris Professor, a professor of finance, and the director of the Laboratory for Financial Engineering at the MIT Sloan School of Management. His current research spans five areas, including evolutionary models of investor behavior and adaptive markets, systemic risk, and financial regulation, among others. Dr. Lo has published extensively in academic journals and authored a number of books including In Pursuit of the Perfect Portfolio, which he cowrote with Stephen Foerster. He has received numerous awards for his work and contributions to modern finance research throughout his career. He holds a bachelor's in economics from Yale University and an AM and Ph.D. in economics from Harvard University.BackgroundIn Pursuit of the Perfect Portfolio: The Stories, Voices, and Key Insights of the Pioneers Who Shaped the Way We Invest, by Andrew W. Lo and Stephen R. FoersterAdaptive Markets: Financial Evolution at the Speed of Thought, by Andrew W. LoHistory"Thirty Maidens of Geneva," the Tontine Coffee-House, thetch.blog.com, Aug. 5, 2019."Why 18th Century Swiss Bankers Bet on the Lives of Young Girls," by Stephen Foerster, sfoerster-5338.medium.com, Sept. 2, 2021.William F. Sharpe"Keynes the Stock Market Investor: A Quantitative Analysis," by David Chambers, Elroy Dimson, and Justin Foo, papers.ssrn.com, Sept. 26, 2013.Eugene F. Fama"Algorithmic Models of Investor Behavior," by Andrew Lo and Alexander Remorov, eqderivatives.com, 2021."In Pursuit of the Perfect Portfolio: Eugene Fama," Interview with Andrew Lo and Eugene Fama, youtube.com, Dec. 15, 2016."Why Artificial Intelligence May Not Be as Useful or as Challenging as Artificial Stupidity," by Andrew Lo, hdsr.mitpress.mit.edu, July 1, 2019.Charles D. Ellis"Charley Ellis: Why Active Investing Is Still a Loser's Game," The Long View podcast, Morningstar.com, May 27, 2020.Other"7 Principles to Help You Create Your Perfect Portfolio," by Robert Powell, marketwatch.com, Nov. 10, 2021.
Does modern portfolio theory work? Danny takes an insightful look back at the life of economist Harry Markowitz (along with his shortcomings) before diving into Mike Webster's tribute to William O'Neil, the fundamentals behind well-performing auto stocks, and breaking down the oops reversal before taking the following week off for the Fourth of July. […] The post It's Not the Chart, It's the Story | Your Money Podcast – Episode 457 appeared first on Revere Asset Management.
Já ouviu falar em Harry Markowitz? Talvez não, mas certamente conhece o seu legado: além de outras teorias, ele é considerado o pai da diversificação. Nesse episódio especial, Ana Leoni conversa com Martin Iglesias sobre as principais contribuições do economista para o mundo das finanças e como você, investidor, pode se beneficiar com elas. Siga-nos no Instagram: https://www.instagram.com/itaupersonnalite/ Acesse o nosso Telegram: http://t.me/itauinvestimentos Essa é uma comunicação geral sobre investimentos. Antes de contratar qualquer produto, confira sempre se é adequado ao seu perfil.
Curious about the current state of the stock and housing market and what's coming up for the second half of the year?Get up to date with the current market updates!In this episode, Ryan Detrick & Sonu Varghese explain the difference between hard and soft economic data and why it's important to look at both to get a better understanding of the economy. Ryan and Sonu also touch on the impact of Harry Markowitz on the investment industry, the potential for a strong July rally, and the current state of the housing market. Ryan and Sonu discuss: The difference between soft data and hard dataHarry Markowitz and his impact on the industry through formalizing diversification and the return versus risk frameworkThe possibility of a continuation of the summer rally in the second half of the year, citing historical data and momentumThe valuations in the S&P500 — with a focus on the tech sectorThe importance of housing in the economy and how it is showing early cycle signalsHow housing has historically led recessions and how it took away from GDP for eight quarters in a rowAnd more!Connect with Ryan Detrick: LinkedIn: Ryan DetrickConnect with Sonu Varghese: LinkedIn: Sonu VargheseInvestment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor. Carson Partners, a division of CWM, LLC, is a nationwide partnership of advisors.
Last week, Harry Markowitz died at the age of 95. He was a Nobel prize winner and the brains behind a famous economic (mathematical?) theory that explains how to diversify one's investment portfolio. So in today's episode for 28th June 2023, we thought we'd take a look back at his famous theory and see whether it still holds good today.
Celebrating a new treasure (baby Hazel). Celebrating an old treasure (great Grandmother Vivian). Light in the Piazza. Okdongsik. Apollo 11 and the quasi-quarantine. Using multisensory imagery therapy (or, what does success smell like to you?) Harry Markowitz and your portfolio. Credits: Talent: Tamsen Granger and Dan Abuhoff Engineer: Ellie Suttmeier Art: Zeke Abuhoff
The ruble weakens - but what actually happened this weekend? No answers here I'm afraid.
“Diversification is the only free lunch in town”. This statement is famously attributed to Nobel laureate Harry Markowitz, and is often cited as your best defence against market risk. But what does diversification mean in practice, and how can we use ETFs to achieve this in a portfolio?
Che legame potranno mai avere le uova con la finanza?Sebbene possa sembrare uno strano collegamento, la celebre frase del Premio Nobel all'economia Harry Markowitz esprime un principio da tenere sempre a mente quando ci si approccia al mondo degli investimenti.Per capire perché è così importante dobbiamo parlare di una regola fondamentale: il rapporto rischio-rendimento.Partiamo con questa ricca puntata?
QuantSpeak host, Dan Tudball, is joined by Dr. John Guerard to discuss his early career beginnings, his work with Harry Markowitz and his advice for future quant finance professionals.
Are you diversified? Inflation, war and a pandemic rage, but the level of risk in your portfolio may not be readily apparent. MarketWatch managing editor for enterprise Nathan Vardi speaks with Sander Gerber, CEO of Hudson Bay Capital about how he manages risk at his $15 billion hedge fund, and his recent work with Nobel prize winner Harry Markowitz on measuring portfolio optimization.
Today on Rational Reminder we take a deep dive into the evolution of modern portfolio theory. We kick the show off with some updates and reviews on some of the brilliant shows and books we are watching right now. A key item from this selection is Stolen Focus: Why You Can't Pay Attention and the points it makes about the value of flow state for learning and creativity. After this week's news stories, we get into the main topic, and Ben starts with a breakdown of portfolio theory as it was laid out by Harry Markowitz in 1952. From there we talk about research that shaped the current understanding of portfolio theory, exploring the distinction between the mean-variance efficient portfolio and the multi-factor efficient portfolio, and how they theoretically combine to make the market portfolio. One of the biggest takeaways here is that your financial asset portfolios can look the same in terms of asset allocation but the person with more macroeconomic risk in the remainder of their financial situation is taking on more risk. Additionally, even if somebody is the perfect candidate to be the mean-variance investor and they could theoretically tilt toward value, it doesn't necessarily mean they have to. We wrap up our conversation by inviting our good friend Larry Swedroe onto the show to speak about his love of reading and share his methods for incorporating what he learns from books into his work and thinking. Key Points From This Episode: Updates: Shows, books, upcoming guests, reviews, and our reading challenge. [0:00:22] A review on Stolen Focus: Why You Can't Pay Attention. [0:11:00] News stories for the week: Wealthfront offers thematic ETFs and more. [0:18:47] Moving onto the main topic for today: How modern portfolio theory has changed since 1952. [0:23:00] Lessons to be taken away from Markowitz's 1952 portfolio theory. [0:25:09] How the math changes when you have a risk-free asset in your portfolio problem. [0:26:59] The capital asset pricing model: the other foundational portfolio theory principle that comes from the mean-variance model. [0:29:08] Portfolio advice that stems from mean-variance optimization. [0:32:46] Building a tangency by expressing information beliefs. [0:36:06] Findings from Michael Jensen's 1967 application of the CAPM. [0:37:04] Why diversification is important according to Markowitz's portfolio theory. [0:38:02] Why the CAPM does not accurately reflect the relationship between risk and expected return. [0:39:49] The origins of multi-factor thinking and examples of multi-factor models. [0:41:10] How the allocation of the multi-factor efficient portfolio creates a third dimension. [0:49:29] How the theory predicts how people behave in aggregate. [0:52:44] Takeaways from today's discussion to keep in mind when building your portfolio. [1:00:00] Larry Swedroe joins us to talk about the importance of reading. [1:03:32] The many subjects that Larry reads about. [1:04:12] How Larry's reading habit works. [1:05:12] How to capture ideas you read for later use. [1:05:57] Larry's storage system for all the books that he reads. [1:08:38] The effectiveness of making a public commitment to read more. [1:12:13]
Investors are constantly searching for the perfect portfolio. Although it may be elusive, there are common principles that can allow all of us to get closer to it. We speak to Stephen Foerster, co-author of the new book "In Pursuit of the Perfect Portfolio: The Stories, Voices, and Key Insights of the Pioneers Who Shaped the Way We Invest" about some of those principles, and what some of history's best investors and researchers can teach us about them. Along with his co-author Andrew Lo, Stephen spoke to investing legends like Harry Markowitz, William Sharpe, Jeremy Siegel, Jack Bogle, Charley Ellis and Robert Shiller to capture their ideas on the construction of a perfect portfolio. We go through each of those interviews to identify the key lessons investors can learn from them. We hope you enjoy the discussion. ABOUT THE PODCAST Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors. SEE LATEST EPISODES https://www.validea.com/excess-returns-podcast FIND OUT MORE ABOUT VALIDEA https://www.validea.com FOLLOW OUR BLOG https://blog.validea.com FIND OUT MORE ABOUT VALIDEA CAPITAL https://www.valideacapital.com FOLLOW JACK Twitter: https://twitter.com/practicalquant LinkedIn: https://www.linkedin.com/in/jack-forehand-8015094 FOLLOW JUSTIN Twitter: https://twitter.com/jjcarbonneau LinkedIn: https://www.linkedin.com/in/jcarbonneau
Rising rates, in theory, are bad for tech stocks. Is that always true? I dive in with the help of a recent article from Ben Carlson. Next, I look into how adding a bit of bitcoin to your portfolio could mean you are investing like a Nobel Prize-winning economist. Finally, we answer a listener's question about retiring early before a feared financial disaster in the economy.Outline of This Episode[] Are rising rates bad for tech stocks?[] Can Bitcoin help you diversify your portfolio?[] What should Steve think about retiring early while he also fears a market crash?Why are Rising Interest Rates Bad for Tech Stocks?This year, there is a definite relationship between rising rates and falling stock prices. The other day, Ben Carlson put out a great piece on his blog showing the inverse relationship between yields and the QQQ, which is the 100 biggest stocks in tech-heavy NASDAQ. Sure enough, in 2021, rising rates have equaled weakness in the QQQ. Why is this happening? In theory, it's all about cash flows. Every single financial assets valuation is equal to the present value of future cash flows. To come up with a present value of future cash flows, you discount that future cash flows at prevailing interest rates (or some variation of it depending on the asset class). The higher the discount rate, the lower the present value.Can Bitcoin help you diversify your portfolio?What do Bitcoin and legendary economist Harry Markowitz have in common? They both advocate for modern portfolio theory. At least Bitcoin has up until now (that is subject to change without notice!). Modern Portfolio Theory says that a rational investor should choose an optimal portfolio that maximizes return but doesn't take too much risk. While Bitcoin on its own has the volatility that would make even the staunchest investor quake, when added modestly to a portfolio, it has displayed positive contributions to portfolios as a whole.Steven has a QuestionSteven asks whether he should consider delaying his early retirement because he has been reading articles and fears a financial crisis could be around the corner. Without speculating on the odds of a crisis, I attempt to help Steven think through some considerations and ultimately recommend that he may be well served to speak with a planner who can stress test his financial plan. Articles MentionedWhy it is wise to add bitcoin to an investment portfolioAre Rising Interest Rates Bad For Tech Stocks?Connect with David DeWittSubscribe to the Invest Smarter NewsletterGet a Free Financial AssessmentSubscribe to the Invest Smarter podcast on your favorite platformApple Podcasts, Spotify, Google Podcasts, or Castbox
#Bitcoin #Bhutan #RippleI'd like to welcome everyone to my new PODCASTDave's Daily Crypto TakeIn this channel I will be providing you with news on a daily basis about cryptocurrency, bitcoin, blockchain, FIAT. My main purpose is to share UNBIASED news and updates. Ultimately I learn and hopefully you learn while I go on this journey.ARTICLES used in today's video:https://ambcrypto.com/can-ethereum-actually-fall-to-2700-just-because-investors-want-it-to/Can Ethereum actually fall to $2700 just because investors want it toEthereum has seen bouts of hikes and falls this month with single-day increases touching almost 11.3% and single-day falls sitting at 10.5%. In such an unanticipated market, why are people turning bearish for Ethereum is the question.And, even if they are, what are the chances of Ethereum actually falling further?Investors want Ethereum to fall?Not all, obviously. The observation comes from Deribit's puts and calls contracts data. According to the same, trading volumes of Puts Options have been as high as 31k, amounting to more than $90 million. These options are targeted mostly for Ethereum to hit $2700.Now, since Deribit represents almost 96% of all Open Interest in the Options market, it can be considered as almost all of the market's opinion.https://www.benzinga.com/markets/cryptocurrency/21/09/23127032/popular-crypto-trader-says-while-bitcoin-takes-a-nap-these-2-defi-coins-show-great-upsidePopular Crypto Trader Says While Bitcoin Takes A Nap, These 2 DeFi Coins Show Great UpsideApex cryptocurrency Bitcoin (CRYPTO: BTC) is likely to see more choppy trading, while decentralized finance (DeFi) tokens Avalanche (CRYPTO: AVAX) and dYdX (CRYPTO: DYDX) continue to trend higher, according to pseudonymous cryptoanalyst “Altcoin Sherpa.”What Happened: Altcoin Sherpa told his 129,000 followers on Twitter that, while Bitcoin will likely see more volatility between the $40,000 and $50,000 levels, it will surge once it breaks through the $50,000 level.https://www.cryptopolitan.com/chinese-government-holds-bitcoin/Did you know? The Chinese government is the second-largest Bitcoin holderThe Chinese government holds more than 194k Bitcoin, which was seized from the PlusToken scammers.Most countries gained cryptocurrencies via seizure, except for El Salvador which recently announced its Bitcoin reserve.Judging by the ongoing crypto regulatory tension and crackdown in China, one can easily conclude that the country is the most stringent place for any digital currency-related operations. Most exchanges and miners operating in the country have had to shut down or migrated to other jurisdictions. Amidst all these tussles, did you know the Chinese government is still the second-largest single entity holding Bitcoin (BTC)?https://ambcrypto.com/this-is-where-bitcoin-has-an-edge-over-stocks-and-real-estate/This is where Bitcoin ‘has an edge' over stocks and real estateBitcoin is considered the most successful cryptocurrency. It continues to entice investors who previously viewed gold as the de-facto inflation hedge and portfolio insurance.So is it a wise decision to add BTC to an investment portfolio?Well, here's what the current issue of the prestigious 178-year-old weekly magazine has to say about the same.“Diversification is both observed and sensible; a rule of behavior which does not imply the superiority of diversification must be rejected both as a hypothesis and as a maxim.”An expert at The Economist, reiterating the aforementioned quote by Nobel Prize winner Harry Markowitz's Journal in 1990 opined that,https://www.bloomberg.com/opinion/articles/2021-09-28/bhutan-s-crypto-ngultrum-launch-gets-the-blockchain-rightThis Tiny Nation Is on a Fast Track to a Crypto RevolutionCrypto is the key to happiness. Or maybe not.The infighting is intensifying at the Federal Reserve.Germany is just as divided as America, but not nearly as salty.Petrol panic is quickly turning into pasta panic in the U.K.https://alternative.me/crypto/fear-and-greed-index/https://coinmarketcap.com/Please subscribe, like, and share so that more and more people can view this content.DISCLAIMER: I will never give any financial advice. And my channel is not considered official Financial Advice. Please do your research before purchasing any cryptocurrency.Thank you very much DaveSupport this podcast at — https://redcircle.com/daves-daily-crypto-take/donations
In 1952, Harry Markowitz published a now-famous article where he proposed that investors should optimize portfolio expected return relative to volatility. Markowitz helped investors realize that by owning a diverse basket of investments, they could significantly reduce their risk without suffering a commensurate reduction in their expected return. This insight marked the birth of Modern Portfolio Theory (MPT) and, by the late 1960s would come to change how investors across the globe thought about investing. The trouble is, some of the assumptions underpinning MPT are keeping more investors from embracing ESG and impact investing. Today's guest Jon Lukomnik joins us to discuss his new book Moving Beyond Modern Portfolio Theory: Investing That Matters. In the book, which is co-authored by James Hawley, Lukomnik and Hawley give a thorough accounting of how many of the assumptions underlying MPT are unrealistic or mistaken. For instance, MPT dictates that investors can mitigate systematic risks (the risks inherent in specific investment) through diversification but cannot influence large systemic risks (threats to the entire system) such as climate change or massive geopolitical instability. Lukomnik and Hawley argue that investors can and do affect systemic risks. For evidence, one need look no further than the 2008 financial crisis where investors fueled the rise of Mortgage-Backed Securities and other collateralized securities that eventually threatened to topple the global financial system. Similarly, MPT is wrong to assert that investors cannot mitigate systemic environmental or social risks like climate change. They can. But doing so requires investors to utilize tactics that aren't part of their traditional toolbox (e.g. shareholder engagement, policy & advocacy, etc.). Jon is well-positioned to write this book. He is currently Managing Director of Sinclair Capital, a consultancy to institutional investors and formerly was a senior city official running New York City's pension funds where he oversaw $80 billion in assets. He also co-founded the International Corporate Governance Network (ICGN), which now represents investors from 43 countries, overseeing some $42 trillion in assets. Jon has been a board member of public, private and not-for-profit companies. He is a three-time recipient of the NACD's Directorship 100 award for being one of the 100 most influential people in US corporate governance. He has also been honoured by the ICGN, Ethisphere, Global Proxy Watch and others. In this episode of the podcast, Jon and I discuss the major arguments from his book including; the importance of MPT; some of the flaws in its underlying assumptions; how the very success of MPT has further undermined the assumptions that underpin it; and why MPT apologists who argue that ESG and impact investing will underperform have it wrong. And be sure to stay tuned to the very end when Jon responds directly to a conversation from an investment podcast where the experts argue that ESG and Impact Investing is doomed to underperform. ENTER OUR GIVEAWAY - for a chance to win an awesome impact investing gift pack that includes a $250 Patagonia gift card, a 60 mins impact investing coaching call with yours truly, and two great impact investing books (including Moving Beyond Modern Portfolio Theory). Visit www.davidoleary.ca/giveaway to enter to win. Resources from this episode: Moving Beyond Modern Portfolio Theory: Investing That Matters by Jon Lukomnik & James Hawley Jon Lukomnik's firm Sinclair Capital Ep 124 of the Rational Reminder Podcast with Professor Lubos Pastor
Is there an ideal portfolio of investment assets, one that perfectly balances risk and reward? In Pursuit of the Perfect Portfolio (Princeton UP, 2021) examines this question by profiling and interviewing ten of the most prominent figures in the finance world—Jack Bogle, Charley Ellis, Gene Fama, Marty Leibowitz, Harry Markowitz, Bob Merton, Myron Scholes, Bill Sharpe, Bob Shiller, and Jeremy Siegel. We learn about the personal and intellectual journeys of these luminaries—which include six Nobel Laureates and a trailblazer in mutual funds—and their most innovative contributions. In the process, we come to understand how the science of modern investing came to be. Each of these finance greats discusses their idea of a perfect portfolio, offering invaluable insights to today's investors. Inspiring such monikers as the Bond Guru, Wall Street's Wisest Man, and the Wizard of Wharton, these pioneers of investment management provide candid perspectives, both expected and surprising, on a vast array of investment topics—effective diversification, passive versus active investment, security selection and market timing, foreign versus domestic investments, derivative securities, nontraditional assets, irrational investing, and so much more. While the perfect portfolio is ultimately a moving target based on individual age and stage in life, market conditions, and short- and long-term goals, the fundamental principles for success remain constant. Aimed at novice and professional investors alike, In Pursuit of the Perfect Portfolio is a compendium of financial wisdom that no market enthusiast will want to be without. Marshall Poe is the founder and editor of the New Books Network. He can be reached at marshallpoe@newbooksnetwork.com. Learn more about your ad choices. Visit megaphone.fm/adchoices
Is there an ideal portfolio of investment assets, one that perfectly balances risk and reward? In Pursuit of the Perfect Portfolio (Princeton UP, 2021) examines this question by profiling and interviewing ten of the most prominent figures in the finance world—Jack Bogle, Charley Ellis, Gene Fama, Marty Leibowitz, Harry Markowitz, Bob Merton, Myron Scholes, Bill Sharpe, Bob Shiller, and Jeremy Siegel. We learn about the personal and intellectual journeys of these luminaries—which include six Nobel Laureates and a trailblazer in mutual funds—and their most innovative contributions. In the process, we come to understand how the science of modern investing came to be. Each of these finance greats discusses their idea of a perfect portfolio, offering invaluable insights to today's investors. Inspiring such monikers as the Bond Guru, Wall Street's Wisest Man, and the Wizard of Wharton, these pioneers of investment management provide candid perspectives, both expected and surprising, on a vast array of investment topics—effective diversification, passive versus active investment, security selection and market timing, foreign versus domestic investments, derivative securities, nontraditional assets, irrational investing, and so much more. While the perfect portfolio is ultimately a moving target based on individual age and stage in life, market conditions, and short- and long-term goals, the fundamental principles for success remain constant. Aimed at novice and professional investors alike, In Pursuit of the Perfect Portfolio is a compendium of financial wisdom that no market enthusiast will want to be without. Marshall Poe is the founder and editor of the New Books Network. He can be reached at marshallpoe@newbooksnetwork.com. Learn more about your ad choices. Visit megaphone.fm/adchoices
Is there an ideal portfolio of investment assets, one that perfectly balances risk and reward? In Pursuit of the Perfect Portfolio (Princeton UP, 2021) examines this question by profiling and interviewing ten of the most prominent figures in the finance world—Jack Bogle, Charley Ellis, Gene Fama, Marty Leibowitz, Harry Markowitz, Bob Merton, Myron Scholes, Bill Sharpe, Bob Shiller, and Jeremy Siegel. We learn about the personal and intellectual journeys of these luminaries—which include six Nobel Laureates and a trailblazer in mutual funds—and their most innovative contributions. In the process, we come to understand how the science of modern investing came to be. Each of these finance greats discusses their idea of a perfect portfolio, offering invaluable insights to today's investors. Inspiring such monikers as the Bond Guru, Wall Street's Wisest Man, and the Wizard of Wharton, these pioneers of investment management provide candid perspectives, both expected and surprising, on a vast array of investment topics—effective diversification, passive versus active investment, security selection and market timing, foreign versus domestic investments, derivative securities, nontraditional assets, irrational investing, and so much more. While the perfect portfolio is ultimately a moving target based on individual age and stage in life, market conditions, and short- and long-term goals, the fundamental principles for success remain constant. Aimed at novice and professional investors alike, In Pursuit of the Perfect Portfolio is a compendium of financial wisdom that no market enthusiast will want to be without. Marshall Poe is the founder and editor of the New Books Network. He can be reached at marshallpoe@newbooksnetwork.com. Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/intellectual-history
Is there an ideal portfolio of investment assets, one that perfectly balances risk and reward? In Pursuit of the Perfect Portfolio (Princeton UP, 2021) examines this question by profiling and interviewing ten of the most prominent figures in the finance world—Jack Bogle, Charley Ellis, Gene Fama, Marty Leibowitz, Harry Markowitz, Bob Merton, Myron Scholes, Bill Sharpe, Bob Shiller, and Jeremy Siegel. We learn about the personal and intellectual journeys of these luminaries—which include six Nobel Laureates and a trailblazer in mutual funds—and their most innovative contributions. In the process, we come to understand how the science of modern investing came to be. Each of these finance greats discusses their idea of a perfect portfolio, offering invaluable insights to today's investors. Inspiring such monikers as the Bond Guru, Wall Street's Wisest Man, and the Wizard of Wharton, these pioneers of investment management provide candid perspectives, both expected and surprising, on a vast array of investment topics—effective diversification, passive versus active investment, security selection and market timing, foreign versus domestic investments, derivative securities, nontraditional assets, irrational investing, and so much more. While the perfect portfolio is ultimately a moving target based on individual age and stage in life, market conditions, and short- and long-term goals, the fundamental principles for success remain constant. Aimed at novice and professional investors alike, In Pursuit of the Perfect Portfolio is a compendium of financial wisdom that no market enthusiast will want to be without. Marshall Poe is the founder and editor of the New Books Network. He can be reached at marshallpoe@newbooksnetwork.com.
Is there an ideal portfolio of investment assets, one that perfectly balances risk and reward? In Pursuit of the Perfect Portfolio (Princeton UP, 2021) examines this question by profiling and interviewing ten of the most prominent figures in the finance world—Jack Bogle, Charley Ellis, Gene Fama, Marty Leibowitz, Harry Markowitz, Bob Merton, Myron Scholes, Bill Sharpe, Bob Shiller, and Jeremy Siegel. We learn about the personal and intellectual journeys of these luminaries—which include six Nobel Laureates and a trailblazer in mutual funds—and their most innovative contributions. In the process, we come to understand how the science of modern investing came to be. Each of these finance greats discusses their idea of a perfect portfolio, offering invaluable insights to today's investors. Inspiring such monikers as the Bond Guru, Wall Street's Wisest Man, and the Wizard of Wharton, these pioneers of investment management provide candid perspectives, both expected and surprising, on a vast array of investment topics—effective diversification, passive versus active investment, security selection and market timing, foreign versus domestic investments, derivative securities, nontraditional assets, irrational investing, and so much more. While the perfect portfolio is ultimately a moving target based on individual age and stage in life, market conditions, and short- and long-term goals, the fundamental principles for success remain constant. Aimed at novice and professional investors alike, In Pursuit of the Perfect Portfolio is a compendium of financial wisdom that no market enthusiast will want to be without. Marshall Poe is the founder and editor of the New Books Network. He can be reached at marshallpoe@newbooksnetwork.com. Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/economics
Is there an ideal portfolio of investment assets, one that perfectly balances risk and reward? In Pursuit of the Perfect Portfolio (Princeton UP, 2021) examines this question by profiling and interviewing ten of the most prominent figures in the finance world—Jack Bogle, Charley Ellis, Gene Fama, Marty Leibowitz, Harry Markowitz, Bob Merton, Myron Scholes, Bill Sharpe, Bob Shiller, and Jeremy Siegel. We learn about the personal and intellectual journeys of these luminaries—which include six Nobel Laureates and a trailblazer in mutual funds—and their most innovative contributions. In the process, we come to understand how the science of modern investing came to be. Each of these finance greats discusses their idea of a perfect portfolio, offering invaluable insights to today's investors. Inspiring such monikers as the Bond Guru, Wall Street's Wisest Man, and the Wizard of Wharton, these pioneers of investment management provide candid perspectives, both expected and surprising, on a vast array of investment topics—effective diversification, passive versus active investment, security selection and market timing, foreign versus domestic investments, derivative securities, nontraditional assets, irrational investing, and so much more. While the perfect portfolio is ultimately a moving target based on individual age and stage in life, market conditions, and short- and long-term goals, the fundamental principles for success remain constant. Aimed at novice and professional investors alike, In Pursuit of the Perfect Portfolio is a compendium of financial wisdom that no market enthusiast will want to be without. Marshall Poe is the founder and editor of the New Books Network. He can be reached at marshallpoe@newbooksnetwork.com. Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/finance
Is there an ideal portfolio of investment assets, one that perfectly balances risk and reward? In Pursuit of the Perfect Portfolio (Princeton UP, 2021) examines this question by profiling and interviewing ten of the most prominent figures in the finance world—Jack Bogle, Charley Ellis, Gene Fama, Marty Leibowitz, Harry Markowitz, Bob Merton, Myron Scholes, Bill Sharpe, Bob Shiller, and Jeremy Siegel. We learn about the personal and intellectual journeys of these luminaries—which include six Nobel Laureates and a trailblazer in mutual funds—and their most innovative contributions. In the process, we come to understand how the science of modern investing came to be. Each of these finance greats discusses their idea of a perfect portfolio, offering invaluable insights to today's investors. Inspiring such monikers as the Bond Guru, Wall Street's Wisest Man, and the Wizard of Wharton, these pioneers of investment management provide candid perspectives, both expected and surprising, on a vast array of investment topics—effective diversification, passive versus active investment, security selection and market timing, foreign versus domestic investments, derivative securities, nontraditional assets, irrational investing, and so much more. While the perfect portfolio is ultimately a moving target based on individual age and stage in life, market conditions, and short- and long-term goals, the fundamental principles for success remain constant. Aimed at novice and professional investors alike, In Pursuit of the Perfect Portfolio is a compendium of financial wisdom that no market enthusiast will want to be without. Marshall Poe is the founder and editor of the New Books Network. He can be reached at marshallpoe@newbooksnetwork.com. Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://newbooksnetwork.supportingcast.fm/new-books-network
In the 1950s, economist Harry Markowitz developed a "Modern Portfolio Theory." His theory aims to maximize returns for a given level of risks. Out of this theory was birthed the idea of buying equities or stocks and holding them. Markowitz won a Nobel Peace Prize for his research.Warren Buffett came along and popularized this style of investing, but then a hedge fund manager named Ray Dalio thought we could track data and do better than buying and holding investments. Many people are stuck investing the way people did seventy years ago, but things have changed. Dalio, pictured below. helped change that.Dalio used computer algorithms to track data that allowed for certain triggers to be activated when trades should be executed. Obviously, a team of asset managers are responsible for managing these programs and the purpose of this investing technique is to mitigate against losses. This investing method is called algorithmic investing. We use models that have internal algorithms that allows a client's account to go in and out of positions depending on what's happening in the overall market, economy, and world. We have developed strategic relationships with well renowned asset managers that manage billions of dollars using these methods. routinely talk to people who never recovered from the 2000 to 2010 stock market performance. That decade, commonly referred to as the ”lost decade,” because since the S&P 500 index was created that was the worst decade for the index. You may have had a negative return if you had been invested in an index that mirrored the S&P 500 during that decade.If you used the buy and hold method you saw years of negative returns, and if you were taking income off of your investments you saw your principal dissipate. Algorithmic investing is a better way to avoid this common pitfall. Why? Because the goal of investing this way is to lessen the chance that we will have to wait years for our money to break even. If you are using your money to live on or if you like the idea of keeping your principal intact more than you like taking big gambles this may be appropriate for you. The days of riding the stock market to the bottom are over. We don't have to ride the volatility roller coaster due to our algorithmic investing methods. David Treece would be happy to schedule a 15-minute call with you to discuss this concept more. You may call our office at 864.641.7955 to schedule a call.Article mentioned Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual's situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.
Why being neutral on growth vs value may actually be speculating.In this episode, Aaron and Trishul do a deep dive on asset allocation. The percent of stocks vs the percent of bonds in an investment portfolio. They explain how an all-stock portfolio is less risky than you think, while an all-bond portfolio is even riskier than you may believe. Losing money is only one type of risk. But if you understand all the other risks involved, you then get to decide which risks are the most important to your situation.Episode ReferencesMMS #43. Is your asset allocation putting your retirement at risk?MMS #42. Investment strategies evolve, but is your portfolio stuck in a foregone era?Investing Forever - Why invest in one thing over another?Investing Forever - Efficient Market HypothesisInvesting Forever - Risk, EverywhereInvesting Forever - Why buy-and-hold can save you bigHarry MarkowitzPodcast DescriptionWelcome to The Mind Money Spectrum Podcast where your hosts Aaron Agte and Trishul Patel go beyond traditional finance questions to help you explore how to use your money to achieve the freedom you want in life. Aaron is a Financial Planner from the Bay Area, and Trishul is a Wealth Manager on the East Coast. For more information about Aaron, check out GraystoneAdvisor.com. And for more information on Trishul check out InvestingForever.com. We thank you all for listening, and stay tuned for our latest episode on our website, MindMoneySpectrum.com.
Il secondo episodio della nostra saga sul passive management e gli index providers.Il ribilanciamento dell’indice è in arrivo e James e Yuanbiao sono pronti ad anticipare le mosse del mercato. Il piano è chiaro: James, utilizzando la sua posizione di insider alla S&P DJI, con l’aiuto di Yuanbiao, scommetterà sulle aziende che verranno incluse ed escluse dall’indice prima che la notizia arrivi al mercato, per tirar su una fortuna. Ma c’è qualcosa che tormenta ancora Yuanbiao: com’è possibile che il solo ribilanciamento di un indice, cioè il cambiamento di una semplice lista di aziende, abbia un impatto così grande sui prezzi delle azioni, tale che se anticipato possa fruttare milioni? Il loro piano si basa sull’idea che una volta ribilanciati gli indici, i fondi passivi saranno costretti a ribilanciare a loro volta i loro investimenti comprando e vendendo azioni. Il quesito che si pone Yuanbiao, quindi, non è scontato: ci sono davvero così tanti soldi investiti nei fondi passivi? Così tanti da influenzare il prezzo delle azioni che comprano e vendono?Per rispondere a queste domande vi trasporteremo attraverso anni di storia economica e finanziaria. Attraverso i primi fondi negli anni 70, le intuizioni di Jack Bogle, e le teorie finanziarie di Harry Markowitz, Jack Treynor, William Sharpe, e Michael Jensen.Quindi allacciate le cinture, e tenetevi forte. Il secondo capitolo di questa saga passa attraverso il passive investing, i fondi passivi, la loro nascita e la loro storia.Siamo Giammarco Miani, Francesco Namari e Gaia Geraci, and the next stop is... Bank Station.Crediti: Testo di Giammarco Miani, Francesco Namari e Gaia Geraci Voci: Giammarco Miani, Francesco Namari e Gaia Geraci Sound design a cura di Andrea Roccabella Fonti: - Petry, J., Fichtner J. and Heemskerk, E., (2019). Steering capital: the growing private authority of index providers in the age of passive asset management, New Political Economy.- Petry, J. (2020). From National Marketplaces to Global Providers of Financial Infrastructures: Exchanges, Infrastructures and Structural Power in Global Finance, New Political Economy.- Braun, B. (2016). From performativity to political economy: index investing, ETFs and asset manager capitalism, New Political Economy.- Bloomberg (2019). When Vanguard's founder first invented the index fund, it was ridiculed as 'un-American'. [online] Available at: https://www.businessinsider.com/vanguard-jack-bogle-first-index-fund-criticism-2019-1?r=DE&IR=T.- Bloomberg (2016). Are Index Funds Communist? [online] Available at: https://www.bloomberg.com/opinion/articles/2016-08-24/are-index-funds-communist.- The Economist (2019). No one did more for the small investor than Jack Bogle. [online] Available at: https://www.economist.com/leaders/2019/01/26/no-one-did-more-for-the-small-investor-than-jack-bogle.
Le sujet : Si l'on devait résumer l'épisode du jour en une phrase, on pourrait dire : comment se servir de la théorie pour travailler sa gestion financière de manière très concrète. Le tout, en analysant différents types de gestions et en parlant d'un incontournable de la gestion financière : le risque. Notre invité du jour : Partner chez Ginjer AM, une société fondée en 2011 pour répondre aux nouveaux enjeux de gestion générés par la précédente crise, Mathieu Vaissié est également chercheur à l'EDHEC Risk Institute. L'invité parfait pour nous éclairer sur ces sujets !Au micro de Matthieu Stefani, cofondateur de CosaVostra, Mathieu Vaissié explique les grands principes théoriques qu'il faut avoir en tête avant de passer à la pratique quand il s'agit de gestion financière. A savoir :# La théorie moderne du portefeuille. Développée en 1952 par Harry Markowitz, cette théorie explique comment mélanger des actifs risqués et non risqués pour optimiser son portefeuille dans le temps et être 100% gagnant (ou presque). # Pour comprendre le marché financier, il faut d'abord comprendre le fonctionnement des humains, ensuite la micro-macro et enfin la mécanique des marchés. # Si le risque a une très mauvaise connotation en France, il est tout de même important de toujours en prendre.# Avoir comme plan A : croire en l'avenir. Et comme plan B : se préparer au pire.# Accepter la volatilité. Nassim Taleb en parle dans son ouvrage Antifragile, c'est ce qui vous permettra d'aiguiser votre système de stabilisation.# Suivre les 3 grands principes : la temporalité, la simplicité (la volatilité implicite) et la diversité. # Mais aussi 3 approches pratiques : le pacte d'Ulysse, l'approche Barbell et l'approche pré-mortem.lls y parlent aussi d'anciens épisodes de La Martingale :#53 - Marc Fiorentino : Plutôt Momentum Player ou Value Investor ? Comment investir en période de bulle ?Mais aussi de l'article de Mathieu qui analyse le bitcoin en suivant une approche pre-mortem.Bonne écoute ! C'est par ici si vous préférez iTunes, ici si vous préférez Deezer ou encore ici si vous préférez Spotify.Merci à Anaxago d'avoir rendu possible cette sixième saison de La Martingale. Anaxago vous permet d'investir en ligne dans une large sélection d'opportunités ancrées dans l'économie réelle : startups, crowdfunding immobilier, immobilier locatif, SCPI, assurance-vie, impact. Selon vos objectifs, vous pouvez réaliser vous-même vos investissements ou choisir d'être accompagné par un gestionnaire privé. Rendez-vous sur anaxago.com, un code promotionnel spécial pour les auditeurs et auditrices de La Martingale vous y attend !
Harry Markowitz economista norteamericano ganó el premio Nobel de economía en 1990 a causa de su disertación del estudio de la frontera eficiente contenida en la teoría de portafolio moderna. Conoce la relación riesgo-beneficio de un portafolio de inversión, la importancia de la diversificación y del origen en la creación de esta teoría. ¡Dale play e incrementa tu IQ financiero! Para acceder a videos, tips, ebooks, cursos de educación financiera e información útil visita: https://www.facebook.com/DeMedinaMau https://twitter.com/DeMedinaMau https://www.instagram.com/demedinamau https://www.linkedin.com/in/mauricio-de-medina O visita: https://www.mauriciodemedina.com Aprende, ahorra e invierte.
Let me tell you the story of two investors, neither of whom knew each other, but whose paths crossed in an interesting way. Grace Groner was orphaned at age 12. She never married. She never had kids. She never drove a car. She lived most of her life alone in a one-bedroom house and worked her whole career as a secretary. She was, by all accounts, a lovely lady. But she lived a humble and quiet life. That made the $7 million she left to charity after her death in 2010 at age 100 all the more confusing. People who knew her asked: Where did Grace get all that money? But there was no secret. There was no inheritance. Grace took humble savings from a meager salary and enjoyed eighty years of hands-off compounding in the stock market. That was it. Weeks after Grace died, an unrelated investing story hit the news. Richard Fuscone, former vice chairman of Merrill Lynch’s Latin America division, declared personal bankruptcy, fighting off foreclosure on two homes, one of which was nearly 20,000 square feet and had a $66,000 a month mortgage. Fuscone was the opposite of Grace Groner; educated at Harvard and University of Chicago, he became so successful in the investment industry that he retired in his 40s to “pursue personal and charitable interests.” But heavy borrowing and illiquid investments did him in. The same year Grace Goner left a veritable fortune to charity, Richard stood before a bankruptcy judge and declared: “I have been devastated by the financial crisis … The only source of liquidity is whatever my wife is able to sell in terms of personal furnishings.” The purpose of these stories is not to say you should be like Grace and avoid being like Richard. It’s to point out that there is no other field where these stories are even possible. In what other field does someone with no education, no relevant experience, no resources, and no connections vastly outperform someone with the best education, the most relevant experiences, the best resources and the best connections? There will never be a story of a Grace Groner performing heart surgery better than a Harvard-trained cardiologist. Or building a faster chip than Apple’s engineers. Unthinkable. But these stories happen in investing. That’s because investing is not the study of finance. It’s the study of how people behave with money. And behavior is hard to teach, even to really smart people. You can’t sum up behavior with formulas to memorize or spreadsheet models to follow. Behavior is inborn, varies by person, is hard to measure, changes over time, and people are prone to deny its existence, especially when describing themselves. Grace and Richard show that managing money isn’t necessarily about what you know; it’s how you behave. But that’s not how finance is typically taught or discussed. The finance industry talks too much about what to do, and not enough about what happens in your head when you try to do it. This report describes 20 flaws, biases, and causes of bad behavior I’ve seen pop up often when people deal with money. 1. Earned success and deserved failure fallacy: A tendency to underestimate the role of luck and risk, and a failure to recognize that luck and risk are different sides of the same coin. I like to ask people, “What do you want to know about investing that we can’t know?” It’s not a practical question. So few people ask it. But it forces anyone you ask to think about what they intuitively think is true but don’t spend much time trying to answer because it’s futile. Years ago I asked economist Robert Shiller the question. He answered, “The exact role of luck in successful outcomes.” I love that, because no one thinks luck doesn’t play a role in financial success. But since it’s hard to quantify luck, and rude to suggest people’s success is owed to luck, the default stance is often to implicitly ignore luck as a factor. If I say, “There are a billion investors in the world. By sheer chance, would you expect 100 of them to become billionaires predominately off luck?” You would reply, “Of course.” But then if I ask you to name those investors – to their face – you will back down. That’s the problem. The same goes for failure. Did failed businesses not try hard enough? Were bad investments not thought through well enough? Are wayward careers the product of laziness? In some parts, yes. Of course. But how much? It’s so hard to know. And when it’s hard to know we default to the extremes of assuming failures are predominantly caused by mistakes. Which itself is a mistake. People’s lives are a reflection of the experiences they’ve had and the people they’ve met, a lot of which are driven by luck, accident, and chance. The line between bold and reckless is thinner than people think, and you cannot believe in risk without believing in luck, because they are two sides of the same coin. They are both the simple idea that sometimes things happen that influence outcomes more than effort alone can achieve. After my son was born I wrote him a letter: Some people are born into families that encourage education; others are against it. Some are born into flourishing economies encouraging of entrepreneurship; others are born into war and destitution. I want you to be successful, and I want you to earn it. But realize that not all success is due to hard work, and not all poverty is due to laziness. Keep this in mind when judging people, including yourself. 2. Cost avoidance syndrome: A failure to identify the true costs of a situation, with too much emphasis on financial costs while ignoring the emotional price that must be paid to win a reward. Say you want a new car. It costs $30,000. You have a few options: 1) Pay $30,000 for it. 2) Buy a used one for less than $30,000. 3) Or steal it. In this case, 99% of people avoid the third option, because the consequences of stealing a car outweigh the upside. This is obvious. But say you want to earn a 10% annual return over the next 50 years. Does this reward come free? Of course not. Why would the world give you something amazing for free? Like the car, there’s a price that has to be paid. The price, in this case, is volatility and uncertainty. And like the car, you have a few options: You can pay it, accepting volatility and uncertainty. You can find an asset with less uncertainty and a lower payoff, the equivalent of a used car. Or you can attempt the equivalent of grand theft auto: Take the return while trying to avoid the volatility that comes along with it. Many people in this case choose the third option. Like a car thief – though well-meaning and law-abiding – they form tricks and strategies to get the return without paying the price. Trades. Rotations. Hedges. Arbitrages. Leverage. But the Money Gods do not look highly upon those who seek a reward without paying the price. Some car thieves will get away with it. Many more will be caught with their pants down. Same thing with money. This is obvious with the car and less obvious with investing because the true cost of investing – or anything with money – is rarely the financial fee that is easy to see and measure. It’s the emotional and physical price demanded by markets that are pretty efficient. Monster Beverage stock rose 211,000% from 1995 to 2016. But it lost more than half its value on five separate occasions during that time. That is an enormous psychological price to pay. Buffett made $90 billion. But he did it by reading SEC filings 12 hours a day for 70 years, often at the expense of paying attention to his family. Here too, a hidden cost. Every money reward has a price beyond the financial fee you can see and count. Accepting that is critical. Scott Adams once wrote: “One of the best pieces of advice I’ve ever heard goes something like this: If you want success, figure out the price, then pay it. It sounds trivial and obvious, but if you unpack the idea it has extraordinary power.” Wonderful money advice. 3. Rich man in the car paradox. When you see someone driving a nice car, you rarely think, “Wow, the guy driving that car is cool.” Instead, you think, “Wow, if I had that car people would think I’m cool.” Subconscious or not, this is how people think. The paradox of wealth is that people tend to want it to signal to others that they should be liked and admired. But in reality those other people bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth solely as a benchmark for their own desire to be liked and admired. This stuff isn’t subtle. It is prevalent at every income and wealth level. There is a growing business of people renting private jets on the tarmac for 10 minutes to take a selfie inside the jet for Instagram. The people taking these selfies think they’re going to be loved without realizing that they probably don’t care about the person who actually owns the jet beyond the fact that they provided a jet to be photographed in. The point isn’t to abandon the pursuit of wealth, of course. Or even fancy cars – I like both. It’s recognizing that people generally aspire to be respected by others, and humility, graciousness, intelligence, and empathy tend to generate more respect than fast cars. 4. A tendency to adjust to current circumstances in a way that makes forecasting your future desires and actions difficult, resulting in the inability to capture long-term compounding rewards that come from current decisions. Every five-year-old boy wants to drive a tractor when they grow up. Then you grow up and realize that driving a tractor maybe isn’t the best career. So as a teenager you dream of being a lawyer. Then you realize that lawyers work so hard they rarely see their families. So then you become a stay-at-home parent. Then at age 70 you realize you should have saved more money for retirement. Things change. And it’s hard to make long-term decisions when your view of what you’ll want in the future is so liable to shift. This gets back to the first rule of compounding: Never interrupt it unnecessarily. But how do you not interrupt a money plan – careers, investments, spending, budgeting, whatever – when your life plans change? It’s hard. Part of the reason people like Grace Groner and Warren Buffett become so successful is because they kept doing the same thing for decades on end, letting compounding run wild. But many of us evolve so much over a lifetime that we don’t want to keep doing the same thing for decades on end. Or anything close to it. So rather than one 80-something-year lifespan, our money has perhaps four distinct 20-year blocks. Compounding doesn’t work as well in that situation. There is no solution to this. But one thing I’ve learned that may help is coming back to balance and room for error. Too much devotion to one goal, one path, one outcome, is asking for regret when you’re so susceptible to change. 5. Anchored-to-your-own-history bias: Your personal experiences make up maybe 0.00000001% of what’s happened in the world but maybe 80% of how you think the world works. If you were born in 1970 the stock market went up 10-fold adjusted for inflation in your teens and 20s – your young impressionable years when you were learning baseline knowledge about how investing and the economy work. If you were born in 1950, the same market went exactly nowhere in your teens and 20s: There are so many ways to cut this idea. Someone who grew up in Flint, Michigan got a very different view of the importance of manufacturing jobs than someone who grew up in Washington D.C. Coming of age during the Great Depression, or in war-ravaged 1940s Europe, set you on a path of beliefs, goals, and priorities that most people reading this, including myself, can’t fathom. The Great Depression scared a generation for the rest of their lives. Most of them, at least. In 1959 John F. Kennedy was asked by a reporter what he remembered from the depression, and answered: I have no first-hand knowledge of the depression. My family had one of the great fortunes of the world and it was worth more than ever then. We had bigger houses, more servants, we traveled more. About the only thing that I saw directly was when my father hired some extra gardeners just to give them a job so they could eat. I really did not learn about the depression until I read about it at Harvard. Since no amount of studying or open-mindedness can genuinely recreate the power of fear and uncertainty, people go through life with totally different views on how the economy works, what it’s capable of doing, how much we should protect other people, and what should and shouldn’t be valued. The problem is that everyone needs a clear explanation of how the world works to keep their sanity. It’s hard to be optimistic if you wake up in the morning and say, “I don’t know why most people think the way they do,” because people like the feeling of predictability and clean narratives. So they use the lessons of their own life experiences to create models of how they think the world should work – particularly for things like luck, risk, effort, and values. And that’s a problem. When everyone has experienced a fraction of what’s out there but uses those experiences to explain everything they expect to happen, a lot of people eventually become disappointed, confused, or dumbfounded at others’ decisions. A team of economists once crunched the data on a century’s worth of people’s investing habits and concluded: “Current [investment] beliefs depend on the realizations experienced in the past.” Keep that quote in mind when debating people’s investing views. Or when you’re confused about their desire to hoard or blow money, their fear or greed in certain situations, or whenever else you can’t understand why people do what they do with money. Things will make more sense. 6. Historians are Prophets fallacy: Not seeing the irony that history is the study of surprises and changes while using it as a guide to the future. An overreliance on past data as a signal to future conditions in a field where innovation and change is the lifeblood of progress. Geologists can look at a billion years of historical data and form models of how the earth behaves. So can meteorologists. And doctors – kidneys operate the same way in 2018 as they did in 1018. The idea that the past offers concrete directions about the future is tantalizing. It promotes the idea that the path of the future is buried within the data. Historians – or anyone analyzing the past as a way to indicate the future – are some of the most important members of many fields. I don’t think finance is one of them. At least not as much as we’d like to think. The cornerstone of economics is that things change over time, because the invisible hand hates anything staying too good or too bad indefinitely. Bill Bonner once described how Mr. Market works: “He’s got a ‘Capitalism at Work’ T-shirt on and a sledgehammer in his hand.” Few things stay the same for very long, which makes historians something far less useful than prophets. Consider a few big ones. The 401(K) is 39 years old – barely old enough to run for president. The Roth IRA isn’t old enough to drink. So personal financial advice and analysis about how Americans save for retirement today is not directly comparable to what made sense just a generation ago. Things changed. The venture capital industry barely existed 25 years ago. There are single funds today that are larger than the entire industry was a generation ago. Phil Knight wrote about his early days after starting Nike: “There was no such thing as venture capital. An aspiring young entrepreneur had very few places to turn, and those places were all guarded by risk-averse gatekeepers with zero imagination. In other words, bankers.” So our knowledge of backing entrepreneurs, investment cycles, and failure rates, is not something we have a deep base of history to learn from. Things changed. Or take public markets. The S&P 500 did not include financial stocks until 1976; today, financials make up 16% of the index. Technology stocks were virtually nonexistent 50 years ago. Today, they’re more than a fifth of the index. Accounting rules have changed over time. So have disclosures, auditing, and market liquidity. Things changed. The most important driver of anything tied to money is the stories people tell themselves and the preferences they have for goods and services. Those things don’t tend to sit still. They change with culture and generation. And they’ll keep changing. The mental trick we play on ourselves here is an over-admiration of people who have been there, done that, when it comes to money. Experiencing specific events does not necessarily qualify you to know what will happen next. In fact it rarely does, because experience leads to more overconfidence than prophetic ability. That doesn’t mean we should ignore history when thinking about money. But there’s an important nuance: The further back in history you look, the more general your takeaways should be. General things like people’s relationship to greed and fear, how they behave under stress, and how they respond to incentives tends to be stable in time. The history of money is useful for that kind of stuff. But specific trends, specific trades, specific sectors, and specific causal relationships are always a showcase of evolution in progress. 7. The seduction of pessimism in a world where optimism is the most reasonable stance. Historian Deirdre McCloskey says, “For reasons I have never understood, people like to hear that the world is going to hell.” This isn’t new. John Stuart Mill wrote in the 1840s: “I have observed that not the man who hopes when others despair, but the man who despairs when others hope, is admired by a large class of persons as a sage.” Part of this is natural. We’ve evolved to treat threats as more urgent than opportunities. Buffett says, “In order to succeed, you must first survive.” But pessimism about money takes a different level of allure. Say there’s going to be a recession and you will get retweeted. Say we’ll have a big recession and newspapers will call you. Say we’re nearing the next Great Depression and you’ll get on TV. But mention that good times are ahead, or markets have room to run, or that a company has huge potential, and a common reaction from commentators and spectators alike is that you are either a salesman or comically aloof of risks. A few things are going on here. One is that money is ubiquitous, so something bad happening tends to affect everyone, albeit in different ways. That isn’t true of, say, weather. A hurricane barreling down on Florida poses no direct risk to 92% of Americans. But a recession barreling down on the economy could impact every single person – including you, so pay attention. This goes for something as specific as the stock market: More than half of all households directly own stocks. Another is that pessimism requires action – Move! Get out! Run! Sell! Hide! Optimism is mostly a call to stay the course and enjoy the ride. So it’s not nearly as urgent. A third is that there is a lot of money to be made in the finance industry, which – despite regulations – has attracted armies of scammers, hucksters, and truth-benders promising the moon. A big enough bonus can convince even honest, law-abiding finance workers selling garbage products that they’re doing good for their customers. Enough people have been bamboozled by the finance industry that a sense of, “If it sounds too good to be true, it probably is” has enveloped even rational promotions of optimism. Most promotions of optimism, by the way, are rational. Not all, of course. But we need to understand what optimism is. Real optimists don’t believe that everything will be great. That’s complacency. Optimism is a belief that the odds of a good outcome are in your favor over time, even when there will be setbacks along the way. The simple idea that most people wake up in the morning trying to make things a little better and more productive than wake up looking to cause trouble is the foundation of optimism. It’s not complicated. It’s not guaranteed, either. It’s just the most reasonable bet for most people. The late statistician Hans Rosling put it differently: “I am not an optimist. I am a very serious possibilist.” 8. Underappreciating the power of compounding, driven by the tendency to intuitively think about exponential growth in linear terms. IBM made a 3.5 megabyte hard drive in the 1950s. By the 1960s things were moving into a few dozen megabytes. By the 1970s, IBM’s Winchester drive held 70 megabytes. Then drives got exponentially smaller in size with more storage. A typical PC in the early 1990s held 200-500 megabytes. And then … wham. Things exploded. 1999 – Apple’s iMac comes with a 6 gigabyte hard drive. 2003 – 120 gigs on the Power Mac. 2006 – 250 gigs on the new iMac. 2011 – first 4 terabyte hard drive. 2017 – 60 terabyte hard drives. Now put it together. From 1950 to 1990 we gained 296 megabytes. From 1990 through today we gained 60 million megabytes. The punchline of compounding is never that it’s just big. It’s always – no matter how many times you study it – so big that you can barely wrap your head around it. In 2004 Bill Gates criticized the new Gmail, wondering why anyone would need a gig of storage. Author Steven Levy wrote, “Despite his currency with cutting-edge technologies, his mentality was anchored in the old paradigm of storage being a commodity that must be conserved.” You never get accustomed to how quickly things can grow. I have heard many people say the first time they saw a compound interest table – or one of those stories about how much more you’d have for retirement if you began saving in your 20s vs. your 30s – changed their life. But it probably didn’t. What it likely did was surprise them, because the results intuitively didn’t seem right. Linear thinking is so much more intuitive than exponential thinking. Michael Batnick once explained it. If I ask you to calculate 8+8+8+8+8+8+8+8+8 in your head, you can do it in a few seconds (it’s 72). If I ask you to calculate 8x8x8x8x8x8x8x8x8, your head will explode (it’s 134,217,728). The danger here is that when compounding isn’t intuitive, we often ignore its potential and focus on solving problems through other means. Not because we’re overthinking, but because we rarely stop to consider compounding potential. There are over 2,000 books picking apart how Warren Buffett built his fortune. But none are called “This Guy Has Been Investing Consistently for Three-Quarters of a Century.” But we know that’s the key to the majority of his success; it’s just hard to wrap your head around that math because it’s not intuitive. There are books on economic cycles, trading strategies, and sector bets. But the most powerful and important book should be called “Shut Up And Wait.” It’s just one page with a long-term chart of economic growth. Physicist Albert Bartlett put it: “The greatest shortcoming of the human race is our inability to understand the exponential function.” The counterintuitiveness of compounding is responsible for the majority of disappointing trades, bad strategies, and successful investing attempts. Good investing isn’t necessarily about earning the highest returns, because the highest returns tend to be one-off hits that kill your confidence when they end. It’s about earning pretty good returns that you can stick with for a long period of time. That’s when compounding runs wild. 9. Attachment to social proof in a field that demands contrarian thinking to achieve above-average results. The Berkshire Hathaway annual meeting in Omaha attracts 40,000 people, all of whom consider themselves contrarians. People show up at 4 am to wait in line with thousands of other people to tell each other about their lifelong commitment to not following the crowd. Few see the irony. Anything worthwhile with money has high stakes. High stakes entail risks of being wrong and losing money. Losing money is emotional. And the desire to avoid being wrong is best countered by surrounding yourself with people who agree with you. Social proof is powerful. Someone else agreeing with you is like evidence of being right that doesn’t have to prove itself with facts. Most people’s views have holes and gaps in them, if only subconsciously. Crowds and social proof help fill those gaps, reducing doubt that you could be wrong. The problem with viewing crowds as evidence of accuracy when dealing with money is that opportunity is almost always inversely correlated with popularity. What really drives outsized returns over time is an increase in valuation multiples, and increasing valuation multiples relies on an investment getting more popular in the future – something that is always anchored by current popularity. Here’s the thing: Most attempts at contrarianism is just irrational cynicism in disguise – and cynicism can be popular and draw crowds. Real contrarianism is when your views are so uncomfortable and belittled that they cause you to second guess whether they’re right. Very few people can do that. But of course that’s the case. Most people can’t be contrarian, by definition. Embrace with both hands that, statistically, you are one of those people. 10. An appeal to academia in a field that is governed not by clean rules but loose and unpredictable trends. Harry Markowitz won the Nobel Prize in economics for creating formulas that tell you exactly how much of your portfolio should be in stocks vs. bonds depending on your ideal level of risk. A few years ago the Wall Street Journal asked him how, given his work, he invests his own money. He replied: I visualized my grief if the stock market went way up and I wasn’t in it – or if it went way down and I was completely in it. My intention was to minimize my future regret. So I split my contributions 50/50 between bonds and equities. There are many things in academic finance that are technically right but fail to describe how people actually act in the real world. Plenty of academic finance work is useful and has pushed the industry in the right direction. But its main purpose is often intellectual stimulation and to impress other academics. I don’t blame them for this or look down upon them for it. We should just recognize it for what it is. One study I remember showed that young investors should use 2x leverage in the stock market, because – statistically – even if you get wiped out you’re still likely to earn superior returns over time, as long as you dust yourself off and keep investing after a wipeout. Which, in the real world, no one would actually do. They’d swear off investing for life. What works on a spreadsheet and what works at the kitchen table are ten miles apart. The disconnect here is that academics typically desire very precise rules and formulas. But real-world people use it as a crutch to try to make sense of a messy and confusing world that, by its nature, eschews precision. Those are opposite things. You cannot explain randomness and emotion with precision and reason. People are also attracted to the titles and degrees of academics because finance is not a credential-sanctioned field like, say, medicine is. So the appearance of a Ph.D stands out. And that creates an intense appeal to academia when making arguments and justifying beliefs – “According to this Harvard study …” or “As Nobel Prize winner so and so showed …” It carries so much weight when other people cite, “Some guy on CNBC from an eponymous firm with a tie and a smile.” A hard reality is that what often matters most in finance will never win a Nobel Prize: Humility and room for error. 11. The social utility of money coming at the direct expense of growing money; wealth is what you don’t see. I used to park cars at a hotel. This was in the mid-2000s in Los Angeles, when real estate money flowed. I assumed that a customer driving a Ferrari was rich. Many were. But as I got to know some of these people, I realized they weren’t that successful. At least not nearly what I assumed. Many were mediocre successes who spent most of their money on a car. If you see someone driving a $200,000 car, the only data point you have about their wealth is that they have $200,000 less than they did before they bought the car. Or they’re leasing the car, which truly offers no indication of wealth. We tend to judge wealth by what we see. We can’t see people’s bank accounts or brokerage statements. So we rely on outward appearances to gauge financial success. Cars. Homes. Vacations. Instagram photos. But this is America, and one of our cherished industries is helping people fake it until they make it. Wealth, in fact, is what you don’t see. It’s the cars not purchased. The diamonds not bought. The renovations postponed, the clothes forgone and the first-class upgrade declined. It’s assets in the bank that haven’t yet been converted into the stuff you see. But that’s not how we think about wealth, because you can’t contextualize what you can’t see. Singer Rihanna nearly went broke after overspending and sued her financial advisor. The advisor responded: “Was it really necessary to tell her that if you spend money on things, you will end up with the things and not the money?” You can laugh. But the truth is, yes, people need to be told that. When most people say they want to be a millionaire, what they really mean is “I want to spend a million dollars,” which is literally the opposite of being a millionaire. This is especially true for young people. A key use of wealth is using it to control your time and providing you with options. Financial assets on a balance sheet offer that. But they come at the direct expense of showing people how much wealth you have with material stuff. 12. A tendency toward action in a field where the first rule of compounding is to never interrupt it unnecessarily. If your sink breaks, you grab a wrench and fix it. If your arm breaks, you put it in a cast. What do you do when your financial plan breaks? The first question – and this goes for personal finance, business finance, and investing plans – is how do you know when it’s broken? A broken sink is obvious. But a broken investment plan is open to interpretation. Maybe it’s just temporarily out of favor? Maybe you’re experiencing normal volatility? Maybe you had a bunch of one-off expenses this quarter but your savings rate is still adequate? It’s hard to know. When it’s hard to distinguish broken from temporarily out of favor, the tendency is to default to the former, and spring into action. You start fiddling with the knobs to find a fix. This seems like the responsible thing to do, because when virtually everything else in your life is broken, the correct action is to fix it. There are times when money plans need to be fixed. Oh, are there ever. But there is also no such thing as a long-term money plan that isn’t susceptible to volatility. Occasional upheaval is usually part of a standard plan. When volatility is guaranteed and normal, but is often treated as something that needs to be fixed, people take actions that ultimately just interrupts the execution of a good plan. “Don’t do anything,” are the most powerful words in finance. But they are both hard for individuals to accept and hard for professionals to charge a fee for. So, we fiddle. Far too much. 13. Underestimating the need for room for error, not just financially but mentally and physically. Ben Graham once said, “The purpose of the margin of safety is to render the forecast unnecessary.” There is so much wisdom in this quote. But the most common response, even if subconsciously, is, “Thanks Ben. But I’m good at forecasting.” People underestimate the need for room for error in almost everything they do that involves money. Two things cause this: One is the idea that your view of the future is right, driven by the uncomfortable feeling that comes from admitting the opposite. The second is that you’re therefore doing yourself economic harm by not taking actions that exploit your view of the future coming true. But room for error is underappreciated and misunderstood. It’s often viewed as a conservative hedge, used by those who don’t want to take much risk or aren’t confident in their views. But when used appropriately it’s the opposite. Room for error lets you endure, and endurance lets you stick around long enough to let the odds of benefiting from a low-probability outcome fall in your favor. The biggest gains occur infrequently, either because they don’t happen often or because they take time to compound. So the person with enough room for error in part of their strategy to let them endure hardship in the other part of their strategy has an edge over the person who gets wiped out, game over, insert more tokens, when they’re wrong. There are also multiple sides to room for error. Can you survive your assets declining by 30%? On a spreadsheet, maybe yes – in terms of actually paying your bills and staying cash-flow positive. But what about mentally? It is easy to underestimate what a 30% decline does to your psyche. Your confidence may become shot at the very moment opportunity is at its highest. You – or your spouse – may decide it’s time for a new plan, or new career. I know several investors who quit after losses because they were exhausted. Physically exhausted. Spreadsheets can model the historic frequency of big declines. But they cannot model the feeling of coming home, looking at your kids, and wondering if you’ve made a huge mistake that will impact their lives. 14. A tendency to be influenced by the actions of other people who are playing a different financial game than you are. Cisco stock went up three-fold in 1999. Why? Probably not because people actually thought the company was worth $600 billion. Burton Malkiel once pointed out that Cisco’s implied growth rate at that valuation meant it would become larger than the entire U.S. economy within 20 years. Its stock price was going up because short-term traders thought it would keep going up. And they were right, for a long time. That was the game they were playing – “this stock is trading for $60 and I think it’ll be worth $65 before tomorrow.” But if you were a long-term investor in 1999, $60 was the only price available to buy. So you may have looked around and said to yourself, “Wow, maybe others know something I don’t.” And you went along with it. You even felt smart about it. But then the traders stopped playing their game, and you – and your game – was annihilated. What you don’t realize is that the traders moving the marginal price are playing a totally different game than you are. And if you start taking cues from people playing a different game than you are, you are bound to be fooled and eventually become lost, since different games have different rules and different goals. Few things matter more with money than understanding your own time horizon and not being persuaded by the actions and behaviors of people playing different games. This goes beyond investing. How you save, how you spend, what your business strategy is, how you think about money, when you retire, and how you think about risk may all be influenced by the actions and behaviors of people who are playing different games than you are. Personal finance is deeply personal, and one of the hardest parts is learning from others while realizing that their goals and actions might be miles removed from what’s relevant to your own life. 15. An attachment to financial entertainment due to the fact that money is emotional, and emotions are revved up by argument, extreme views, flashing lights, and threats to your wellbeing. If the average American’s blood pressure went up by 3%, my guess is a few newspapers would cover it on page 16, nothing would change, and we’d move on. But if the stock market falls 3%, well, no need to guess how we might respond. This is from 2015: “President Barack Obama has been briefed on Monday’s choppy global market movement.” Why does financial news of seemingly low importance overwhelm news that is objectively more important? Because finance is entertaining in a way other things – orthodontics, gardening, marine biology – are not. Money has competition, rules, upsets, wins, losses, heroes, villains, teams, and fans that makes it tantalizingly close to a sporting event. But it’s even an addiction level up from that, because money is like a sporting event where you’re both the fan and the player, with outcomes affecting you both emotionally and directly. Which is dangerous. It helps, I’ve found, when making money decisions to constantly remind yourself that the purpose of investing is to maximize returns, not minimize boredom. Boring is perfectly fine. Boring is good. If you want to frame this as a strategy, remind yourself: opportunity lives where others aren’t, and others tend to stay away from what’s boring. 16. Optimism bias in risk-taking, or “Russian Roulette should statistically work” syndrome: An over attachment to favorable odds when the downside is unacceptable in any circumstance. Nassim Taleb says, “You can be risk loving and yet completely averse to ruin.” The idea is that you have to take risk to get ahead, but no risk that could wipe you out is ever worth taking. The odds are in your favor when playing Russian Roulette. But the downside is never worth the potential upside. The odds of something can be in your favor – real estate prices go up most years, and most years you’ll get a paycheck every other week – but if something has 95% odds of being right, then 5% odds of being wrong means you will almost certainly experience the downside at some point in your life. And if the cost of the downside is ruin, the upside the other 95% of the time likely isn’t worth the risk, no matter how appealing it looks. Leverage is the devil here. It pushes routine risks into something capable of producing ruin. The danger is that rational optimism most of the time masks the odds of ruin some of the time in a way that lets us systematically underestimate risk. Housing prices fell 30% last decade. A few companies defaulted on their debt. This is capitalism – it happens. But those with leverage had a double wipeout: Not only were they left broke, but being wiped out erased every opportunity to get back in the game at the very moment opportunity was ripe. A homeowner wiped out in 2009 had no chance of taking advantage of cheap mortgage rates in 2010. Lehman Brothers had no chance of investing in cheap debt in 2009. My own money is barbelled. I take risks with one portion and am a terrified turtle with the other. This is not inconsistent, but the psychology of money would lead you to believe that it is. I just want to ensure I can remain standing long enough for my risks to pay off. Again, you have to survive to succeed. A key point here is that few things in money are as valuable as options. The ability to do what you want, when you want, with who you want, and why you want, has infinite ROI. 17. A preference for skills in a field where skills don’t matter if they aren’t matched with the right behavior. This is where Grace and Richard come back in. There is a hierarchy of investor needs, and each topic here has to be mastered before the one above it matters: Richard was very skilled at the top of this pyramid, but he failed the bottom blocks, so none of it mattered. Grace mastered the bottom blocks so well that the top blocks were hardly necessary. 18. Denial of inconsistencies between how you think the world should work and how the world actually works, driven by a desire to form a clean narrative of cause and effect despite the inherent complexities of everything involving money. Someone once described Donald Trump as “Unable to distinguish between what happened and what he thinks should have happened.” Politics aside, I think everyone does this. There are three parts to this: You see a lot of information in the world. You can’t process all of it. So you have to filter. You only filter in the information that meshes with the way you think the world should work. Since everyone wants to explain what they see and how the world works with clean narratives, inconsistencies between what we think should happen and what actually happens are buried. An example. Higher taxes should slow economic growth – that’s a common sense narrative. But the correlation between tax rates and growth rates is hard to spot. So, if you hold onto the narrative between taxes and growth, you say there must be something wrong with the data. And you may be right! But if you come across someone else pushing aside data to back up their narrative – say, arguing that hedge funds have to generate alpha, otherwise no one would invest in them – you spot what you consider a bias. There are a thousand other examples. Everyone just believes what they want to believe, even when the evidence shows something else. Stories over statistics. Accepting that everything involving money is driven by illogical emotions and has more moving parts than anyone can grasp is a good start to remembering that history is the study of things happening that people didn’t think would or could happen. This is especially true with money. 19. Political beliefs driving financial decisions, influenced by economics being a misbehaved cousin of politics. I once attended a conference where a well known investor began his talk by saying, “You know when President Obama talks about clinging to guns and bibles? That is me, folks. And I’m going to tell you today about how his reckless policies are impacting the economy.” I don’t care what your politics are, there is no possible way you can make rational investment decisions with that kind of thinking. But it’s fairly common. Look at what happens in 2016 on this chart. The rate of GDP growth, jobs growth, stock market growth, interest rates – go down the list – did not materially change. Only the president did: Years ago I published a bunch of economic performance numbers by president. And it drove people crazy, because the data often didn’t mesh with how they thought it should based on their political beliefs. Soon after a journalist asked me to comment on a story detailing how, statistically, Democrats preside over stronger economies than Republicans. I said you couldn’t make that argument because the sample size is way too small. But he pushed and pushed, and wrote a piece that made readers either cheer or sweat, depending on their beliefs. The point is not that politics don’t influence the economy. But the reason this is such a sensitive topic is because the data often surprises the heck out of people, which itself is a reason to realize that the correlation between politics and economics isn’t as clear as you’d like to think it is. 20. The three-month bubble: Extrapolating the recent past into the near future, and then overestimating the extent to which whatever you anticipate will happen in the near future will impact your future. News headlines in the month after 9/11 are interesting. Few entertain the idea that the attack was a one-off; the next massive terrorist attack was certain to be around the corner. “Another catastrophic terrorist attack is inevitable and only a matter of time,” one defense analyst said in 2002. “A top counterterrorism official says it’s ‘a question of when, not if,” wrote another headline. Beyond the anticipation that another attack was imminent was a belief that it would affect people the same way. The Today Show ran a segment pitching parachutes for office workers to keep under their desks in case they needed to jump out of a skyscraper. Believing that what just happened will keep happening shows up constantly in psychology. We like patterns and have short memories. The added feeling that a repeat of what just happened will keep affecting you the same way is an offshoot. And when you’re dealing with money it can be a torment. Every big financial win or loss is followed by mass expectations of more wins and losses. With it comes a level of obsession over the effects of those events repeating that can be wildly disconnected from your long-term goals. Example: The stock market falling 40% in 2008 was followed, uninterrupted for years, with forecasts of another impending plunge. Expecting what just happened to happen soon again is one thing, and an error in itself. But not realizing that your long-term investing goals could remain intact, unharmed, even if we have another big plunge, is the dangerous byproduct of recency bias. “Markets tend to recover over time and make new highs” was not a popular takeaway from the financial crisis; “Markets can crash and crashes suck,” was, despite the former being so much more practical than the latter. Most of the time, something big happening doesn’t increase the odds of it happening again. It’s the opposite, as mean reversion is a merciless law of finance. But even when something does happen again, most of the time it doesn’t – or shouldn’t – impact your actions in the way you’re tempted to think, because most extrapolations are short term while most goals are long term. A stable strategy designed to endure change is almost always superior to one that attempts to guard against whatever just happened happening again. If there’s a common denominator in these, it’s a preference for humility, adaptability, long time horizons, and skepticism of popularity around anything involving money. Which can be summed up as: Be prepared to roll with the punches. Jiddu Krishnamurti spent years giving spiritual talks. He became more candid as he got older. In one famous talk, he asked the audience if they’d like to know his secret. He whispered, “You see, I don’t mind what happens.” That might be the best trick when dealing with the psychology of money. http://www.collaborativefund.com/blog/the-psychology-of-money/ growing businessand answeredsingle funds todayS&P 500stories people tell themselvesdirectly ownwe know that’s the keyI remember This is from 2015Barack Obamaone above it mattersis hard to spot.I published
Miguel Armaza sits down with Noah Kerner, CEO of Acorns, a mobile savings and investment platform that has raised hundreds of millions of dollars from PayPal, Bain Capital Ventures, DST Global, NBC, Comcast, Greycroft as well as a long list of Hollywood celebrities including The Rock and Jennifer Lopez. Originally from New York City’s East Village, Noah is a 4-time entrepreneur who at one point DJ'ed for Jennifer Lopez, built a creative agency in his 20s, and is also a Co-Founder of the shareholder rights fintech startup Say. We discuss: - Noah’s eclectic background - Why he only pursues projects that make him come alive - His journey at Acorns and the evolution and challenges over the years - Their approach to building company culture, defining corporate values, and recruiting talent - The surprising effects of COVID on their business - Entrepreneurial advice - And a whole lot more! Noah Kerner Born in New York City’s east village, Noah Kerner is the CEO of the micro-investing app Acorns and co-founder of the shareholder rights startup Say. His background is colorful: 4X entrepreneur, Co-author of "Chasing Cool” with the former CEO of Barneys, and former DJ for Jennifer Lopez. In his 20s, Noah built the leading creative agency for the young adult market, Noise. Before being acquired by Engine, Noise developed hundreds of products and marketing campaigns for this generation including Facebook’s first application, the first credit card to reward responsibility rather than spending for Chase, Vice's music site Noisey, and the top branded game in the App Store. Noah has been recognized as one of Billboard Magazine’s “Top 30 Under 30,” AdWeek’s “Top 20 Under 40,” Fast Company’s “Innovation Agents” and “Impact Council” members, and as a judge for the Webby Awards. He has also advised and invested in a variety of fast-growing startups, including WeWork, where he served as the first Chief Strategy & Marketing Officer from 2013-2014. Passionate about educating today’s youth, Noah has lectured on entrepreneurialism, fintech, and media at NYU, UCLA, Stanford, and Columbia and currently serves on the Board of VH1's Save The Music Foundation. Noah is a graduate of Cornell University where he studied Psychology and Economics. About Acorns Acorns is the country's fastest-growing saving and investing app helping more than 8.2 million save and invest for the future. Its easy-to-use, mobile-first technology makes it simple for anyone to set aside and invest life's spare money. Acorns allows customers to automatically invest in a low-cost, diversified portfolio of exchange-traded funds offered by some of the world's top asset managers (including Vanguard and BlackRock). Customers grow their wealth in one of five portfolios constructed with help from world-renowned Nobel laureate economist Dr. Harry Markowitz. Acorns' smart portfolio algorithms automatically work in the background of life, helping users build wealth naturally, pennies at a time. From Acorns mighty oaks do grow. Acorns is accessed simply and easily via the app for iPhone, Android, or desktop. Visit Acorns.com for more.
https://www.moneyunder30.com/best-investment-apps Visit thesavings.club to get $5 towards your automatic savings account | Powered by Digit.co Is the Stock Market the answer for you? Learn more: https://gum.co/learnstocks Free Audiobook: http://www.audibletrial.com/marketadventures Call or text me directly at 786-254-1413 Idea behind the industry The “too busy” investor The undisciplined investor The “it's too hard to learn” investor Betterment Robo-advisor and financial advice automates the investment process from start to finish. give you a personalized portfolio of low-cost index funds. They help you decide how much to invest and sync with your bank so that you have the option of regular automatic contributions. uses a complex algorithm option of speaking to a financial expert. Pricing $0 minimum and 0.25% annual fee for the standard account; $100,000 minimum and 0.40% annual fee for the premium account. Stash Beginning investors Stash allows you to invest in fractions of shares, which means you can start with as small as 1 cent.¹ They offer you a choice of roughly 1800 single stocks and ETFs.² So there is a lot to choose from based on your desired risk, financial situation, and lifestyle. Offer financial education. Pricing Beginner – This plan is $1/month and offers a personal investment account, bank account access⁴, and financial education.³ Growth – This plan is $3/month and offers all the features of the beginner plan, plus accounts with tax benefits for retirement⁵ investing.³ Stash+ – This is a $9/month plan that offers everything the other two plans offer, plus a debit card, custodial accounts (UGMA/UTMA) for up to two of your children⁶, and monthly marketing insights.³ Acorns Beginning investors automatically invest your spare change. links with your credit and debit card and automatically “rounds up” the spare change to the next dollar on every purchase. You can also sign up for Acorns Spend and get a debit card that will round up in real time. For example, if you bought a latte for $3.60, they'd automatically deposit 40 cents to your investment account, which can potentially add up to quite a lot every month. Based on your desired risk, Acorns gives you the choice of five different portfolio options, which were created by Nobel Prize-winning economist Harry Markowitz. M1 Finance offers automated investing in pre-selected portfolios, or you can choose from any stock or ETF. M1 is meant for people who like the idea of automating their investments, but still want some say on where their money is going. M1 Finance allows investors to choose from any stock or ETF. Unlike robo-investors, you're not restricted to their pre-selected ETFs, but they do offer preset templates for beginners. You can also set up recurring automatic deposits on a weekly or monthly basis, or any custom time frame you desire. Pricing Free of charge; $100 minimum to open an account and $500 minimum to open a retirement account. Pros Less effort Cons Lack of control Fees Ability for “true” profit (accounting for inflation, etc) --- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app --- Send in a voice message: https://anchor.fm/marketadventures/message Support this podcast: https://anchor.fm/marketadventures/support
It’s fascinating to me that in our day of high speed innovation, how we invest is slow to innovate. Modern Portfolio Theory was developed years ago and it’s broken. Harry Markowitz developed MPT in 1952 and won a Nobel Peace Prize for it.Investopedia.com states, “Modern portfolio theory (MPT) is a theory on how risk-averse investors can construct portfolios to maximize expected return based on a given level of market risk.Leland B. Hevner in an article states, MPT dictates that portfolios be designed to match the risk tolerance of each investor using asset allocation techniques. Then they are to be held for the long-term. Because these portfolios have no sensitivity to market, they are dangerously vulnerable to market crashes.Hevnver goes on to state that we saw portfolios that were constructed using MPT experience 30% to 50% losses in 2008 during the Great Recession and states we saw these portfolios strained again this year with the coronavirus pandemic.The average portfolio construction for those within a 10-year window of retirement is normally problematic. Why? Because many portfolios are setup using MPT and they are on a set it and forget trajectory.A better way is to use professional money managers who dynamically position your investments. By doing this, when economic storms happen, we can potentially mitigate losses and develop a more consistent return.Often, at our firm we use mutual funds and exchange traded funds that are either evaluated on a daily or monthly basis in an attempt to ensure your investments are not sustaining massive losses. But why is set it and forget it method not okay for a retiree? Well, number one volatility is here to stay. We’ve seen thousand-point drops in the market somewhat routinely the last few years.Right now, the market is running up on the hope that a Covid vaccination will get things back to normal. The market likes when the rules stay the same. When the rules shift, the market gets nervous. So, when more regulations come or higher taxes, volatility may increase.Our goal is to avoid violent downturns in the market. Our goal is to create an all-weather financial plan where you are able to make a return, but attempt to limit your downside losses.Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.
Em um país que mais da metade dos brasileiros não conhece e não utiliza produtos de investimento, 80% dos trabalhadores não conseguem poupar para realizar alguma forma de investimento e, dos que conseguem, a maioria “investe” em poupança; há de se esperar que o desconhecimento acerca da variedade de produtos disponíveis aumente a curiosidade do potencial investidor sobre as ações. Decerto que o mercado de renda variável é atrativo. Lógico! Os maiores retornos estão naqueles ativos mais arriscados, já dizia Harry Markowitz e tantos outros. Diante disso, as ações em algum momento se tornam uma espécie de possibilidade de ganhar dinheiro.
Join our hosts and Moody’s Analytics Global Head of Quantitative Research Dr. Jing Zhang as they take on modern portfolio theory and the quantification of credit risk. Highlights include a review of Harry Markowitz’s paper “Portfolio Selection” and a discussion about new drivers in credit analytics such as climate risk. Read more about our guest:Dr. Jing Zhang, Global Head of Quantitative Research, Moody's AnalyticsThis episode makes reference to the following works: "Portfolio Selection" by Harry Markowitz, published in the Journal of Finance, 1952.
O RetornoCast de hoje é uma versão Pocket, ou seja, é um episódio menor do que os convencionais, aproveite para ouvir e compartilhar! Sabemos que no mercado financeiro existem muitos termos difíceis de entender, mas aqui na Mais Retorno, só existe termo sem financês e te ajudamos a descomplicar este mercado. O termo de hoje é o Índice de Sharpe. Você já ouviu falar? Aproveite para conferir este episódio completo do RetornoCast sobre este tema com os nossos especialistas em investimentos Felipe Vieira, Felipe Medeiros e Lucas Paulino. Este índice foi desenvolvido por William. F. Sharpe, economista americano que ganhou o Prêmio Nobel de 1990 em Ciências Econômicas, juntamente com Harry Markowitz e Merton Miller, por desenvolver modelos para auxiliar na tomada de decisões de investimentos. Por meio do seu índice, investidores e demais interessados podem reconhecer uma eventual vantagem entre fundos ou uma carteira de investimentos em relação a ativos livres de risco. Ou seja, através do índice de sharpe você consegue analisar o custo-benefício de um investimento. Acompanhe o episódio completo para entender como este índice funciona na prática! E se você ficou preocupado(a) em ter que fazer todas estas contas para descobrir qual investimento vale mais a pena, fique tranquilo(a) porque na nossa ferramenta no site da Mais Retorno você já encontra esta informação nos fundos de investimentos. Clique aqui para acessar: https://maisretorno.com/
Was ist eigentlich genau Diversifikation? Wieso ist Michael der Meinung, dass die meisten diesen Begriff nicht richtig verstanden haben? Was ist Volatilität und wie sinnvoll ist die? Diese Fragen, aber auch was es mit Michaels T Shirt und Endrits Lieblingszahl auf sich hat, wird in der heutigen Folge besprochen. Es geht um die Portfoliotheorie, die Theorie die bereits in den 50er Jahren von Harry Markowitz entwickelt wurde und bis heute bestand hat. Was muss man beachten wenn man ein Portfolio aufbaut und wie kann man das auch ohne Supercomputer und künstliche Intelligenz für sich umsetzen!
Wie ist ein Wertpapier-Depot optimal aufgestellt? Das fragen sich nicht nur viele Anleger, sondern auch der US-Ökonom und Nobelpreisträger Harry Markowitz, der mit Hilfe seiner Portfoliotheorie die Auswirkung von Diversifikation auf Risiko und Rendite untersuchte. Michael Bloss, Finanzexperte und EIFD-Direktor, erklärt das Modell und die wichtigsten Lehren der Theorie.
Klug anlegen - Der Podcast zur Geldanlage mit Karl Matthäus Schmidt.
Nicht alle Eier in einen Korb legen. Was schon früher zu Großmutters Zeiten galt, ist auch noch heute brandaktuell und gelebte Praxis an der Börse. Ein breit gestreutes Portfolio ist eines der Schlüsselelemente, um das Risiko zu reduzieren und vernünftig entlohnt zu werden. Doch das ist oft gar nicht so einfach – und daher gehört auch dies zu den größten Fehlern der Anleger. Wie sieht ein guter Depot-Mix aus? Was heißt konkret breit gestreut – reichen eine Handvoll Dax-Titel, denn im Heimatmarkt kennt man sich ja für gewöhnlich aus, oder wie viele Titel sollten es sein? Und wovon sollte man lieber die Finger lassen? Antworten gibt Karl Matthäus Schmidt, Vorstandsvorsitzender der Quirin Privatbank AG und Gründer der digitalen Geldanlage quirion, in dieser Podcast-Folge. Und so viel sei vorneweg schon gesagt: Er ist kein Fan des Glücksspiels, ob die richtige Farbe beim Hütchenspiel oder aufs richtige Pferd zu setzen. Für ihn reine Spekulation. Schmidt setzt lieber auf Alles und macht gemeinsame Sache mit dem Markt, der immer Recht hat.
The episode attempts to discuss a wide range of theories and also the Modern Portfolio Theory of Harry Markowitz. --- Support this podcast: https://anchor.fm/dr-mahesh-agnihotri/support
Chuck Self serves as the Chief Investment Officer (CIO) and the Chief Operating Officer (COO) at iSectors® LLC with approximately $400 million in assets under management. Chuck tells you how to build a diversified portfolio and use risk to stay invested and protect your downside. Chuck shares what he learned from Harry Markowitz and some of the pitfalls to avoid when building a diversified portfolio. --- Support this podcast: https://anchor.fm/smartmoneycircle/support
In this episode (aired on 6/28/20), host Ron DeLegge chats one-on-one with finance giant and Nobel Prize winning economist Harry Markowitz from an archived interview in late 2008 during the Great Financial Crisis. Also up: Ron matches up current investing themes with ETF tickers. Finally, Ron gives you a 7-point checklist for evaluating your half-year 2020 investment results, plus updates on the 2020 CARES Act. ETF tickers mentioned in this episode: FLYT, TMF, TECL, SOXL, SCHB, BND GLD and others. Follow the show on Twitter @ IndexShow and order Ron's latest book "Habits of the Investing Greats" https://www.amazon.com/gp/product/B07T2PJDN3/ref=dbs_a_def_rwt_bibl_vppi_i0
Our episode today is about the future of ____. We left that last part blank because you can decide for yourself. We interview Jay Rogers and Vikrant Aggarwal who are, respectively, the CEO co-founder and president of Local Motors. I could tell you that Local Motors is an automotive manufacturing company, but that would be criminally uninformative. Local Motors makes vehicles that are unusual, and makes them in an unusual way. Their marquis product, Olli, is a fully autonomous, electric vehicle shuttle bus. Their manufacturing process relies on Direct Digital Manufacturing (DDM), hybrid additive and subtractive manufacturing, and is designed around "microfactories" – hence the local in local motors. This conversation is about the future of mobility, manufacturing, work, supply chain, energy, you decide. And, on what other podcast can you get a CEO talking about Nobel winning Harry Markowitz, Michael Porter, Nassim Taleb, Oprah Winfrey and the Wolverine movies?If you haven’t yet rated and reviewed our show – Please do! It only takes a minute, and it really helps. Starting with the next episode, we'll read our favorite review left for us on Apple Podcasts, so make a it a good one.
In this episode, we discuss how we use the Kelly criterion in our own investing strategy. Investing is not a one-time event, and markets are not always efficient, as claimed by Harry Markowitz and his followers. Investing is instead a series of repeated similar bets, and markets are frequently inefficient. We can regularly find stock markets and sectors which have become cheaper than their long-run mean valuations. Given the above, why wouldn't you look to place bets on high-probability events rather than risk losing your capital in expensive markets? Kelly developed a formula that showed how to invest fractionally and understand your edge. Kelly investing should lead you to the question: ‘What is your informational edge?' In this episode Stephen tells us about one informational edge he uses - the CAPE ratio - and how it can be yours too, given its high correlation with expected returns. We discuss why understanding the Kelly criterion, capital growth theory, and position sizing are crucial to maximising your long term wealth. There will always be great opportunities in the future, so you must make sure you are around to capitalise on them by waiting for the fat pitch. Some of the key points we discuss in this episode include: -What is the Kelly Criterion? -A proven system for maximising your long-term wealth -THIS is what your information edge can be -It's a big world out there, and there are many markets to choose from. Why limit yourself? -When the odds are in your favour, bet more (and when they're not, bet less...or not at all). Download a free chapter of our book: https://www.lowrateshighreturns.com/podcast These are the books we mentioned in the episode. Check them out! Fooled by Randomness by Nassim Taleb: https://www.goodreads.com/book/show/38315.Fooled_by_Randomness The Warren Buffett Way by Robert G. Hagstrom https://www.goodreads.com/book/show/18613679-the-warren-buffett-way-workbook
Te interesa invertir en las bolsas de valores y aprender de finanzas y economía? En este episodio nuestro invitado es Marco Rodriguez un asesor financiero con amplía experiencia en la bolsa de valores. Marco ha trabajado para diferentes compañías donde maneja fondos de inversión que varian dependiendo de la persona (metas, presupuesto, riesgo, etc). Marco explica que el porcentaje de acciones en nuestro portafolio de inversiones se recomienda que sea el numero 100 menos nuestra edad. Otras opciones para invertir son bonos (Bonds en inglés) conocidos como un "pagaré". Los bonos tienen diferentes calificaciones basadas en la habilidad de la compañía para pagar sus deudas. Entre más el riesgo más el potencial para ganar y usualmente el porcentaje de ganancia varia del 1% al 4%. Charlie Munger fué mencionado en la conversación conocido como el socio de Warren Buffet el mejor inversionista en la historia. De hecho Marco recomienda leer las cartas a los accionistas escritas por Mr. Buffet (en inglés "Berkshire Hathaway Letters to Shareholders"). Un término que también se explicó fué el de "efficient frontier" desarrollado por Harry Markowitz el cuál define la diversificación de riesgo por medio de la adición de más activos como bonds, commodities, real estate investment trusts, etc. Por último Marco comparte algo muy interesante donde explica que la mayoría de la gente dice querer tener un millón de dólares pero más bien quieren GASTAR un millón de dólares, entonces hay una gran diferencia entre querer GASTAR un millón de dólares a querer TENER un millón de dólares, y para la 2da opción tenemos que educarnos en el area financiera!Gracias por ser parte de esta comunidad! Si te agradó el episodio subscríbete al podcast y ayuda a más emprendedores compartiendo el episodio, dejando un comentario y de pasada poniéndonos 5-estrellitas para que algoritmo nos ayude a crecer! GRACIAS Y VÁMONOS! Escucha el podcast en:APPLE ITUNESSPOTIFYGOOGLE PODCASTSSTITCHEROVERCASTRedes Sociales:TikTok https://vm.tiktok.com/@elgeravargasYouTube https://www.youtube.com/elgeravargasTwitter https://twitter.com/elgeravargasInstagram https://www.instagram.com/elgeravargas/Facebook https://www.facebook.com/elgeravargas/
A B3 negocia ficar de fora do feriado antecipado de 5 dias em São Paulo. Entenda quais impactos de um possível fechamento do pregão no meio da pandemia. E na aula de hoje do quadro "Qual o plano, professor?", Martin Iglesias fala sobre o legado do economista Harry Markowitz, conhecido por conceituar a ideia de diversificação moderna dos investimentos, considerando risco e retorno.
“Não coloque todos os ovos numa cesta só”. Essa máxima, repetida há décadas no universo dos investimentos, faz mais sentido ainda agora. Diante da pandemia, o investidor que estava concentrado em Bolsa provavelmente perdeu dinheiro, já aqueles que estavam aplicados também em dólar, ouro ou em títulos atrelados à Selic, com certeza sofreram menos. Por isso, o Cafeína de hoje fala sobre a importância de diversificar os investimentos para proteger o seu dinheiro em qualquer circunstância. Samy Dana e Priscila Yazbek explicam a consagrada Teoria Moderna dos Portfólios, do economista Harry Markowitz, que prova matematicamente que distribuir os ovos em diferentes cestas é a melhor estratégia para maximizar os ganhos e reduzir riscos ao investir. Você vai ver também como fazer isso na prática. O analista de renda variável da Easynvest, José Falcão de Castro, indica investimentos para quem quer começar a diversificar tanto entre aplicações mais conservadoras, de renda fixa, quanto para quem já aceita mais riscos e quer diversificar também na renda variável. E no Pitaco, a disparada do dólar, que bateu novo recorde nominal e fechou aos R$ 5,52 com os rumores sobre a demissão do ministro da Justiça, Sergio Moro. E ainda: os setores e as ações preferidas dos principais gestores do Brasil.
On entame notre 7ème semaine de confinement, c'est un vrai marathon et challenge psychologique qui s'installe. La bonne nouvelle c'est qu'on est toujours là pour toi, et qu'on est même super contents de te retrouver. Debrief, c'est ton condensé de l'épisode précédent où on approfondit ensemble certaines thématiques clés abordées avec notre invité.e. Pas le temps d'écouter l'épisode en entier, ou tout simplement envie d'un autre regard sur l'épisode ? Debrief est là pour ça. Concernant nos deux sujets du jour, nous allons te parler de stratégie d'investissement et comment la diversification te permet de liimiter les risques, que tu sois VC ou investisseur du dimanche. Et puis on se demandera aussi si prendre des risques est vraiment une question d'âge ? Tu veux creuser un peu ? · Cet article explique en détails quelles sont les chances de tomber sur un "outlier", cette perle rare qui peut générer a elle seule plus de 50% des revenus d'un fond · La théorie moderne du portefeuille développée par Harry Markowitz pour ceux qui veulent comprendre et approfondir un principe fondamental en finance · N'aie pas peur de prendre des risques! · Un objectif ca se mesure... et un risque aussi! En adaptant le modèle SMART par exemple Pour interagir avec nous et nous donner du feedback, découvrir les coulisses de nos enregistrements, rejoins-nous sur : Instagram Facebook Si tu adores déjà ce podcast, n'hésite pas à le partager et nous laisser une bonne note avec un petit commentaire sympa sur Apple Podcast, c'est super motivant pour nous :) Des suggestions, envie de nous écrire une folle déclaration, ou un futur invité à nous recommander ? On a hâte de te lire sur horsdesfrontieres@gmail.com
Något som jag finner väldigt fascinerande inom sparande och ekonomi är den, från tid till annan, totala avsaknaden av argument baserade i fakta, forskning och akademiska studier. Få andra områden är så känsloladdade och inte minst kopplade till vår mänskliga irrationalitet. Det är ingen hemlighet att jag är ett stort fan av sparande i indexfonder. En indexfond är per definition det genomsnittliga resultatet av alla aktörer på marknaden. Hälften ska vara bättre och hälften ska vara sämre. Men ställ den enkla frågan: "Är du en bättre bilförare än genomsnittet?" och en klar majoritet av de tillfrågade kommer att svara ja. Försäkringsbolaget IF, som ställde den frågan 2017, konstaterade att endast 4 procent av svenskarna upplevde själva att de körde sämre än genomsnittet och hela 61 % körde bättre eller mycket bättre än genomsnittet. Resultaten verkar tyvärr inte vara helt olika det jag möter i olika spar- och investeringssammanhang. För att citera IF:s informationschef: "Lite självinsikt skulle inte skada på vissa håll..." Med tanke på de senaste veckornas artiklar om de bästa fonderna 2020, om portföljerna för 2020 och bästa strukturen för ens ekonomi, upplever jag att det här är ett bra tillfälle att komplettera med en artikelserie om de akademiska studierna som ligger till grund vår sparfilosofi. Jag brukar ofta referera till "Forskningen säger att .... " och ofta länka till källan men vi har faktiskt aldrig haft ett avsnitt där vi systematiskt gått genom studierna till grund för vår investeringsstrategi. Något som faktiskt är både spännande och intressant. Att jag dessutom i veckan skulle delta i en paneldebatt hos Aktiespararna med en känd aktieboksförfattare gjorde det möjligt att slå två flugor i en smäll. Resultatet blev att du får det här och kommande poddavsnitt om de viktigaste akademiska studierna och de fördelar dessa kan ge i ditt sparande. Jag fick ett tillfälle att plugga på ordentligt. Paneldebatten var en, hmmm, hur ska jag uttrycka det, en intressant upplevelse jag säkert kommer få möjlighet att återkomma till. De studierna vi går genom i dagens avsnitt berör: - Harry Markowitz, "Portfolio Selection", 1952, Nobelpris 1990 - William Sharpe, "Capital Asset Prices", 1964, Nobelpris 1990 - Eugene Fama, "Behavior of Stock Market Prices", 1965, Nobelpris 2013 - Daniel Kahneman, "Prospect Theory", 1979, Nobelpris 2002 - Litteraturgenomgång av Martijn Cremers, 2019 Vi hoppas att du kommer att uppskatta dagens avsnitt vars syfte är att ge både en introduktion och allmänbildning kring den forskning som faktiskt finns. Det är ju den som vi och kanske du också faktiskt investerar enligt. Särskilt om du har valt en fondrobot som vi brukar rekommendera. Tack för den här veckan och på återhörande nästa söndag! Jan och Caroline --- Eugene Fama-videon: https://www.youtube.com/watch?v=RVgsLWor3TQ --- Grov innehållsförteckning: 00:06:10 - Några generella fördelar med akademiska studier. 00:09:49 - Några generella nackdelar med akademiska studier. 00:18:20 - Det perspektiv du har på sparande är viktigt. 00:24:35 - Tillbakablick med disclaimers kring studierna. 00:28:35 - “Portfolio Selection” - Risken hänger ihop med avkastningen. 00:33:53 - William Sharpe - Indexfondernas förfader 00:38:05 - Vad får vi ut av att läsa de här studierna? 00:41:47 - Efficient Market Hypothesis-Teorin 00:45:16 - Att titta bakåt ger inte en fördel för framtida investeringar 00:50:03 - Prospekt-teorin och mänskligt beteende 00:52:02 - Tänka snabbt och långsamt 00:57:16 - Förlustaversion - vi plockar ut pengar från vårt sparande när det går dåligt på börsen. 01:01:07 - Du kan ha fel 1000 gånger, och fortfarande säga att du tagit rätt beslut. 01:03:25 - Hur vi faktiskt beter oss i förhållande till börsen. 01:05:45 - Avslutning
Welcome to Finance and Fury Traditional asset class allocation Diversification getting harder Diversification in a world where most asset classes are becoming correlated Diversification: what it is and isn’t Diversification across asset classes is one of the most fundamental principles of investment portfolio construction Reason - different types of assets perform differently at different stages of the economic cycle When done properly - diversification across asset classes results in stable returns at less risk - An appropriately allocated portfolio helps smooth out the ups and downs of the markets so investors can enjoy the positive compounding of returns over time About downside risks – whole portfolio shouldn’t fall as much in the face of a market correction – allows a portfolio to retain its value A loss of 10% = 11% to reverse the loss A loss of 25% = 33% to reverse the loss A loss of 50% = 100% to reverse the loss – 90% loss = 900% gain Asset allocation and Diversification - asset allocation is not the same as asset class-based diversification Diversification means getting a better return for the same level of risk Contrasts with just adding bonds to an equity portfolio to reduce its volatility, as doing so would also reduce long-run returns because bonds tend to return less over time than equities. Table 1 illustrates the power of asset class-based diversification Example – $1,000 invested in the 1970s – 20% more from 50/50 with lower risk While shares and commodities are both deemed relatively risky investments, combining them helps mitigate the risk of the portfolio – due to low correlation Diversification has changed Initially - 1952 - economist Harry Markowitz’s released ‘Portfolio Selection’ in the Journal of Finance - demonstrated that building a portfolio of imperfectly correlated assets could result in reduced portfolio risk for a given level of expected return 1964 – in the same journal - Sharpe’s Capital Asset Pricing Model (CAPM) described the relationship between risk and expected return - introduced “beta” as a measure of sensitivity to market risk and the risk return relationship 1986 - Financial Analysts Journal- examined the allocations of 91 pension funds - findings that on average, asset allocation decisions explained more than 90% of pension fund risk, as measured by the volatility of returns over time. 2000 - Roger Ibbotson and Paul Kaplan argued that asset allocation policy actually explained 100% of the typical individual investor’s return Then traditional Diversification died - The extremely negative impact that the GFC of 2007–2009 had on investment portfolios caused many people to question the value of asset class-based diversification. The major reason is the correlations between asset classes - such as international and Australian equities Large Negative economic shocks that affect the whole global economy (like the GFC) can cause all equities to fall In other words - it has been observed that diversification disappears when it is most needed – but diversification never promised to ensure gains or prevent losses – but just showed the pattern based on different annual returns per asset class Various asset classes are becoming increasingly correlated, therefore making it more difficult to build a truly diversified portfolio. International markets use to be the staple of diversification – there has been an increase in correlation between the global equity markets - European markets Due to the EU Emerging markets are also becoming more closely correlated with US and UK markets Increase in unseen correlation between the fixed income and equities markets PIMCO Australia also says long-term trends such as globalisation are driving correlations higher Correlations have been rising due to greater inter-connectivity between global markets. Multinational corporations have proliferated to such an extent that what happens in Europe and Asia impacts the US markets and vice versa. Many Fortune 500 companies in the US depend on emerging markets for growth Today’s world of globalisation - greater connectivity of economies and of financial markets Means traditional asset classes are subject to more common shocks than in the past Equity correlations since 1995 – Between USLC, USSC, Int LC, EM 1995 to 2000 – USSC, Int LC, EM – showed low to mod correlation to USLC (0.3-0.7) 2001 to 2007 – USSC, Int LC, EM – showed medium correlation to USLC (0.7-0.9) 2008 to 2015 – Mod to high correlation – EM especially – Reasons – due to markets becoming more globalised and more integrated and monetary policy Also - passive investing and exchange-traded funds (ETFs) or index hugging long managers There is a positive correlation between equities and bonds - both go up or down at the same time For a long time - correlation between the asset classes has been negative Depended on the stage of the economic cycle and whether the shocks affecting the economy are demand-driven or supply-driven. Is asset class-based diversification still relevant? Theory breakdown - Correlations were never constant One criticism of Markowitz’s original theory was that it assumes asset class return, return volatility and the correlation in returns are relatively fixed, whereas they can change greatly over time as economic conditions change. Needs to be constantly updated to reflect that markets today are different from 1950s There is fact that correlations are increasing between the various equity markets and bond markets - used to be a staple of diversification Now - Instead of looking for uncorrelated investments, the focus should shift to slight reductions in correlation. Investments with correlations of 0.5 will provide greater diversification benefits than those with 0.7 correlations. while bonds were traditionally valued for their steady income streams, their attraction has dimmed somewhat with interest rates near all-time lows Therefore – if the risk-free rate (the 10-year government bond yield) is low, then expected returns from equities will adjust lower. In response to all these changes, one approach is to look at less traditional asset classes such as commodities and alternatives to construct a diversified portfolio that enhances returns for an investor’s given risk appetite Alternative approaches to portfolio diversification More asset classes are needed to construct a diversified portfolio than in the past Old school - a universe of large cap stocks and Government bonds was sufficient – today not the case why investment universes have increased and now include corporate bonds, high-yield bonds, commodities, real assets and even currencies How many asset classes is enough? The standard diversified portfolio contains five to six asset classes Equities (domestic and international) and bonds (domestic and international) typically make up four of the classes supplemented by cash and perhaps commodities There is the risk of doing too much – Imagine bonds and share perfectly negatively correlated – your returns would be cancelled out Also certain subsections like Emerging markets equities, for example, don’t tend to add much extra diversification benefit as their returns are more volatile than developed equity markets and returns from both tend to be highly correlated But going into finer asset class diversification benefits – investing within assets classes – especially shares – ASX300 – Index isn’t that diversified outside of Financials and Resources – investing in assets classes can help The risk factor approach - defines risk factors as the underlying risk exposures that drive the return of an asset class Shares - risk is split into general equity market risk and company-specific risk A bond’s risk is a function of credit or issuer-specific risk and interest-rate risk By understanding the underlying risk factors within various asset classes, investors can ultimately choose which asset class allows them to most efficiently obtain exposure to that particular risk factor Using cash to reduce volatility and add diversification - A common recommendation for investment portfolios has been 60%-80% shares and 40%-20% bonds – using this as a benchmark investment portfolio, between 1928 and 2014, stocks provided about 71% of the return while the bonds acted as a stabilizer But Bonds have enjoyed a prolonged bull run, but with the Federal Reserve now on the path to normalising interest rates, and several other central banks set to follow, is it really wise to have a 40% allocation to bonds over the next few years? Cash could be the new stabilizer for the short term for equity portfolios - Cash is the least correlated of all assets. Cash can act as an equity portfolio stabiliser similar to bonds. However, because cash is so stable, less of it is required to achieve the same outcome as a bigger allocation of bonds in a mixed portfolio. Also – does minimize long term returns potential – but only if you continue to hold the cash long term Further, unlike bonds, cash can be used to fund short-term expenditures so that the investor does not have to sell long-term investments at a loss. Cash can also be used to buy undervalued assets as they arise. Of course, cash provides very little return, but neither do bonds at the moment. And with interest rates set to rise, returns from bonds could well be negative for a period. (Mindful Investing n.d.). Rebalancing methods - left unchanged - longer term equities have a very strong returns compared to defensive funds - the portfolio will be more exposed to shares when they are typically getting more and more overvalued – make up more of the portfolio value Limitations of diversification also need to be recognized. Diversification per se cannot protect investors from portfolio losses during major equity market meltdowns - why getting overall asset allocation right remains the most important consideration No one best way to do it – but having capital hedges like commodities (gold and physical metals) and cash reserves to take advantage of buying opportunities can limit downside risk and through purchasing undervalued assets – maximise long term returns Thanks for listening today. If you want to get in contact you can do so here: http://financeandfury.com.au/contact
Modern Portfolio Theory is important strategy that many financial advisors use to minimize risk and maximize returns for their clients. Today's guest on The Goldstein on Gelt show is Dr. Harry Markowitz, winner of the 1990 Nobel Prize for Economics, who invented Modern Portfolio Theory. Find out what Modern Portfolio Theory is and why it is has become the cornerstone of financial planning. Dr. Markowitz advises how to navigate today's turbulent markets. How does Modern Portfolio Theory compare as an investment strategy to asset allocation? Find out what the differences are between strategic asset allocation and tactical asset allocation, and which may be best for you. For more information about asset allocation, listen to this episode of another of Doug Goldstein's financial podcasts, Rich As A King. Follow Dr. Markowitz and his work on http://hmarkowitz.com
Lex Sokolin iLex Sokolin is a futurist and an entrepreneur focused on the next generation of financial services. He is the global fintech co-head at ConsenSys, a blockchain technology company building the infrastructure, applications, and practices that enable a decentralized world. Lex focuses on emerging digital assets, public and private enterprise blockchain solutions, and decentralized autonomous organizations. Previously, Lex was the global director of fintech strategy at Autonomous Research (acquired by AllianceBernstein), an equity research firm serving institutional investors, where he covered artificial intelligence, blockchain, neobanks, digital lenders, roboadvisors, payments, insurtech, and mixed reality. Before Autonomous, Lex was COO at AdvisorEngine, a digital wealth management technology platform, and CEO of NestEgg Wealth, a roboadvisor that partnered with financial advisors. Prior to NestEgg, Lex held roles in investment management and banking at Barclays, Lehman Brothers and Deutsche Bank. Lex is a contributor of thought leadership to The Wall Street Journal, The Economist, Bloomberg, the Financial Times, Reuters, American Banker, ThinkAdvisor, and InvestmentNews, among others. He is a regular speaker at industry conferences such as Money2020, LendIt, Schwab Impact, In|Vest, T3 Enterprise Edition, and Consensus. He earned a JD/MBA from Columbia University and a BA in economics and law from Amherst College. “The good news is that I didn’t have any money, or whatever money I did have I put into some discounted Lehman stock thinking these guys knew what they’re talking about. And if there’s so much confidence, and they have such fancy suits, and they get paid so much, this thing’s got to … go up. And of course ... it didn’t go up, not at all, not in any way whatsoever, it just went down.” Lex Sokolin, on his time at Lehman Brothers in 2007 Support our sponsor Today’s episode is sponsored by the Women Building Wealth membership group, the complete proven step-by-step course to guide women from novice to competent investor. To learn more, visit: WomenBuildingWealth.net. Worst investment ever Fresh graduate joins Lehman Brothers analyst program The year was 2006. Lex had just graduated from his undergraduate degree in economics. It was still cool to work in finance. He joined the Lehman Brothers’ analyst program alongside 40-50 people when the brand was very strong. His intake were young kids out of school, and associates. They were starting at the investment management division. One of the orientation activities was a stock-picking contest in which new staff had three months to generate the highest returns in a no-risk setting. Wins stock-picking contest just as big banks start to fail He won, which did amazing and damaging things for his ego. He was on top of the world as he had bested Stanford and Harvard people, and was on the road to success. It was now 2007. Bear Stearns appeared to be failing and collapsed shortly afterward. Rumors were circulating that the big banks had a lot of bad debt on their balance sheets and that they couldn’t meet their obligations. A liquidity crisis was looming and Lehman was in the crosshairs. Staff 401K packages are matched in Lehman stock At the time, Lex was in this investment management business and the Lehman price was around US$120 per share. Then it started to fall. It halved its value to 60. Then it plunged to 20 and Lex remembers that day. There was a strong corporate culture at Lehman Brothers. The corporate color was green so people would say everybody leaves green because everyone’s on the same team. So managing directors got paid in Lehman stock as a percentage of their accomplishments. Analysts such as Lex were matched in their 401K plans in stock. If you saved $10,000 you would get $10,000 in Lehman stock and nothing else. Also, staff could buy more stock at a 20% discount. Gordon-Gekko type invokes team spirit, tells staff to invest in Lehman stock So Lehman stock was $20, and it had been falling for months. Lex watched as the New York branch manager, an 80s throwback with Gordon Gekko suspenders and haircut, was saying that the stock price was ridiculous and that it had never been so cheap, so he was directing staff to buy more Lehman stock. Mr. Greed is Good was among people managing $80 billion in that business and another $200 billion in an adjacent business. Lex was 22 so seeing such experienced people made him think it was a good idea. The good news was that he didn’t have much money, because the stock never recovered and due to politics and personal animosity, and the devious dealings of Goldman Sachs, the whole company was the only one not saved by the bailout or takeover deals. Lehmans went to zero. Lehmans alone was left out in the cold Merrill Lynch also collapsed, but it was taken over by the Bank of America. So it didn’t go to zero. Bear Stearns had collapsed earlier but it was bought by JP Morgan. Lehman was the example for the whole world of learning how to be punished, and seeing the destruction of wrong balance sheet construction. Lehman was not a worse business than Merrill, it was a better business than Merrill, and it was not a worse business than Bear Stearns. What however happened was that when it was time to talk about a bailout, all the people in the room, from the treasury secretary to all the other banks, every single person had been a Goldman Sachs (GS) employee. 401K matching also went to zero also So Lex’s retirement package also matched Lehman’s and went to zero. So as a young analyst who was really good at virtual stock games none of the outcome was part of his decision process and was not something he knew. So understanding that this was not an exception, that the world is defined by these edge cases, that the whole thing is just these edge cases, was an extremely valuable takeaway. While he lost everything he had at the time, in the long horizon, “things turned out quite all right”. “I was a super interesting moment, I am so incredibly grateful for having that early in my career, you know, two years into my career, because I saw everything from the behavioural biases that people have about the places where they work, the problems of over indexing and to one particular security, and then more than anything, you know, like idiosyncratic risk that you really can’t predict.” Lex Sokolin Some lessons Overconcentration in any position exposes you to great idiosyncratic risk This is the kind of risk that you cannot create a model for, nor can you have any good sense for it, because it is unknowable. Diversification in portfolio construction is the answer Build a portfolio without overexposing yourself to any particular holding – diversify. If you’re doing a barbell strategy, make sure the other side of the barbell is really conservative, so if you one of your positions fails, it doesn’t harm your portfolio in a big way. People are not reliable sources of information Most of the time the information you’re receiving from other people is based on emotion. They might dress it up in technical language, but it’s not useful information. It’s just how they feel. “So understanding that this (Lehman’s collapse) was not an exception, that the world is defined by these edge cases, that the whole thing is just these edge cases … was a majorly valuable takeaway.” Lex Sokolin Andrew’s takeaways Benefits of diversification Risk disappears or reduces very quickly, in the beginning as you start to blend stocks together. “Diversification is the seat belt and blending in some sort of other instruments, such as bonds for example, is the airbag.” Common mistakes Collated from the My Worst Investment Ever series, the six main categories of mistakes made by interviewees, starting from the most common, are: Failed to do their own research Failed to properly assess and manage risk Were driven by emotion or flawed thinking Misplaced trust Failed to monitor their investment Invested in a start-up company Misplaced trust Particularly for young people, you see senior financial experts managing billions of dollars, and you think: “This guy’s got to know.” Andrew always says, everyone’s ultimately making it up, this man or that woman just has a lot more experience making it up than others, and maybe has some great experience in risk management or another area. It’s hard to rely on humans to give you great information It’s also hard to rely on machines, or charts or data, to give you correct information Actionable advice Figure out what know that you know and what you know that you don’t know Everything flows from that: the selection of your investment philosophy, the selection of your risk tolerance and your ability to put money to work. Figure out your goals for the financial planning you’re doing. Ask yourself the following: Why are you investing? What are you trying to get out of it? How are you going to behave when different scenarios play out in your investment’s performance? What kind of investor are you? Do you need help? Do you want to delegate that to somebody who will make you feel more secure and give you a smarter overlay? Or do you want to do it yourself? No. 1 goal for next the 12 months Lex at ConsenSys, one of the largest blockchain technology companies in the world, is focused on the tokenization of securities and the “connective tissue” between the traditional financial world and the world of digital assets, crypto assets, and how the two connect through platforms and software. So he’s trying to build some cool tools for people to get access to financial instruments that historically they either didn’t have enough money to do or was just too difficult to get involved with. It’s a very interesting opportunity because there has been a lot of pushback recently against cryptocurrencies at every level. Parting words If listeners would like to keep up with some fintech news and developments, Lex invites you to check out his Twitter or follow him on LinkedIn for his newsletter. You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points Connect with Lex Sokolin LinkedIn Twitter Website Email Connect with Andrew Stotz Astotz.com LinkedIn Facebook Instagram Twitter YouTube My Worst Investment Ever Podcast Further reading mentioned Harry Markowitz (1971) Portfolio Selection: Efficient Diversification of Investments s a futurist and an entrepreneur focused on the next generation of financial services. He is the global fintech co-head at ConsenSys, a blockchain technology company building the infrastructure, applications, and practices that enable a decentralized world. Lex focuses on emerging digital assets, public and private enterprise blockchain solutions, and decentralized autonomous organizations. Previously, Lex was the global director of fintech strategy at Autonomous Research (acquired by AllianceBernstein), an equity research firm serving institutional investors, where he covered artificial intelligence, blockchain, neobanks, digital lenders, roboadvisors, payments, insurtech, and mixed reality. Before Autonomous, Lex was COO at AdvisorEngine, a digital wealth management technology platform, and CEO of NestEgg Wealth, a roboadvisor that partnered with financial advisors. Prior to NestEgg, Lex held roles in investment management and banking at Barclays, Lehman Brothers and Deutsche Bank. Lex is a contributor of thought leadership to The Wall Street Journal, The Economist, Bloomberg, the Financial Times, Reuters, American Banker, ThinkAdvisor, and InvestmentNews, among others. He is a regular speaker at industry conferences such as Money2020, LendIt, Schwab Impact, In|Vest, T3 Enterprise Edition, and Consensus. He earned a JD/MBA from Columbia University and a BA in economics and law from Amherst College. “The good news is that I didn’t have any money, or whatever money I did have I put into some discounted Lehman stock thinking these guys knew what they’re talking about. And if there’s so much confidence, and they have such fancy suits, and they get paid so much, this thing’s got to … go up. And of course ... it didn’t go up, not at all, not in any way whatsoever, it just went down.” Lex Sokolin, on his time at Lehman Brothers in 2007 Support our sponsor Today’s episode is sponsored by the Women Building Wealth membership group, the complete proven step-by-step course to guide women from novice to competent investor. To learn more, visit: WomenBuildingWealth.net. Worst investment ever Fresh graduate joins Lehman Brothers analyst program The year was 2006. Lex had just graduated from his undergraduate degree in economics. It was still cool to work in finance. He joined the Lehman Brothers’ analyst program alongside 40-50 people when the brand was very strong. His intake were young kids out of school, and associates. They were starting at the investment management division. One of the orientation activities was a stock-picking contest in which new staff had three months to generate the highest returns in a no-risk setting. Wins stock-picking contest just as big banks start to fail He won, which did amazing and damaging things for his ego. He was on top of the world as he had bested Stanford and Harvard people, and was on the road to success. It was now 2007. Bear Stearns appeared to be failing and collapsed shortly afterward. Rumors were circulating that the big banks had a lot of bad debt on their balance sheets and that they couldn’t meet their obligations. A liquidity crisis was looming and Lehman was in the crosshairs. Staff 401K packages are matched in Lehman stock At the time, Lex was in this investment management business and the Lehman price was around US$120 per share. Then it started to fall. It halved its value to 60. Then it plunged to 20 and Lex remembers that day. There was a strong corporate culture at Lehman Brothers. The corporate color was green so people would say everybody leaves green because everyone’s on the same team. So managing directors got paid in Lehman stock as a percentage of their accomplishments. Analysts such as Lex were matched in their 401K plans in stock. If you saved $10,000 you would get $10,000 in Lehman stock and nothing else. Also, staff could buy more stock at a 20% discount. Gordon-Gekko type invokes team spirit, tells staff to invest in Lehman stock So Lehman stock was $20, and it had been falling for months. Lex watched as the New York branch manager, an 80s throwback with Gordon Gekko suspenders and haircut, was saying that the stock price was ridiculous and that it had never been so cheap, so he was directing staff to buy more Lehman stock. Mr. Greed is Good was among people managing $80 billion in that business and another $200 billion in an adjacent business. Lex was 22 so seeing such experienced people made him think it was a good idea. The good news was that he didn’t have much money, because the stock never recovered and due to politics and personal animosity, and the devious dealings of Goldman Sachs, the whole company was the only one not saved by the bailout or takeover deals. Lehmans went to zero. Lehmans alone was left out in the cold Merrill Lynch also collapsed, but it was taken over by the Bank of America. So it didn’t go to zero. Bear Stearns had collapsed earlier but it was bought by JP Morgan. Lehman was the example for the whole world of learning how to be punished, and seeing the destruction of wrong balance sheet construction. Lehman was not a worse business than Merrill, it was a better business than Merrill, and it was not a worse business than Bear Stearns. What however happened was that when it was time to talk about a bailout, all the people in the room, from the treasury secretary to all the other banks, every single person had been a Goldman Sachs (GS) employee. 401K matching also went to zero also So Lex’s retirement package also matched Lehman’s and went to zero. So as a young analyst who was really good at virtual stock games none of the outcome was part of his decision process and was not something he knew. So understanding that this was not an exception, that the world is defined by these edge cases, that the whole thing is just these edge cases, was an extremely valuable takeaway. While he lost everything he had at the time, in the long horizon, “things turned out quite all right”. “I was a super interesting moment, I am so incredibly grateful for having that early in my career, you know, two years into my career, because I saw everything from the behavioural biases that people have about the places where they work, the problems of over indexing and to one particular security, and then more than anything, you know, like idiosyncratic risk that you really can’t predict.” Lex Sokolin Some lessons Overconcentration in any position exposes you to great idiosyncratic risk This is the kind of risk that you cannot create a model for, nor can you have any good sense for it, because it is unknowable. Diversification in portfolio construction is the answer Build a portfolio without overexposing yourself to any particular holding – diversify. If you’re doing a barbell strategy, make sure the other side of the barbell is really conservative, so if you one of your positions fails, it doesn’t harm your portfolio in a big way. People are not reliable sources of information Most of the time the information you’re receiving from other people is based on emotion. They might dress it up in technical language, but it’s not useful information. It’s just how they feel. “So understanding that this (Lehman’s collapse) was not an exception, that the world is defined by these edge cases, that the whole thing is just these edge cases … was a majorly valuable takeaway.” Lex Sokolin Andrew’s takeaways Benefits of diversification Risk disappears or reduces very quickly, in the beginning as you start to blend stocks together. “Diversification is the seat belt and blending in some sort of other instruments, such as bonds for example, is the airbag.” Common mistakes Collated from the My Worst Investment Ever series, the six main categories of mistakes made by interviewees, starting from the most common, are: Failed to do their own research Failed to properly assess and manage risk Were driven by emotion or flawed thinking Misplaced trust Failed to monitor their investment Invested in a start-up company Misplaced trust Particularly for young people, you see senior financial experts managing billions of dollars, and you think: “This guy’s got to know.” Andrew always says, everyone’s ultimately making it up, this man or that woman just has a lot more experience making it up than others, and maybe has some great experience in risk management or another area. It’s hard to rely on humans to give you great information It’s also hard to rely on machines, or charts or data, to give you correct information Actionable advice Figure out what know that you know and what you know that you don’t know Everything flows from that: the selection of your investment philosophy, the selection of your risk tolerance and your ability to put money to work. Figure out your goals for the financial planning you’re doing. Ask yourself the following: Why are you investing? What are you trying to get out of it? How are you going to behave when different scenarios play out in your investment’s performance? What kind of investor are you? Do you need help? Do you want to delegate that to somebody who will make you feel more secure and give you a smarter overlay? Or do you want to do it yourself? No. 1 goal for next the 12 months Lex at ConsenSys, one of the largest blockchain technology companies in the world, is focused on the tokenization of securities and the “connective tissue” between the traditional financial world and the world of digital assets, crypto assets, and how the two connect through platforms and software. So he’s trying to build some cool tools for people to get access to financial instruments that historically they either didn’t have enough money to do or was just too difficult to get involved with. It’s a very interesting opportunity because there has been a lot of pushback recently against cryptocurrencies at every level. Parting words If listeners would like to keep up with some fintech news and developments, Lex invites you to check out his Twitter or follow him on LinkedIn for his newsletter. You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr. Deming’s 14 Points Connect with Lex Sokolin LinkedIn Twitter Website Email Connect with Andrew Stotz Astotz.com LinkedIn Facebook Instagram Twitter YouTube My Worst Investment Ever Podcast Further reading mentioned Harry Markowitz (1971) Portfolio Selection: Efficient Diversification of Investments
This week Ryan and Jack discuss two editorials on machine learning and its impact and use within Research. The first paper is an Editorial by Rob Arnott, Cam Harvey, and Harry Markowitz discussing, in their opinion, proper protocols for research (back-testing) in the era of machine learning. The Second paper, summarized by Elisabetta, is by Joseph Simonian, Marcos Lopez de Prado, and Frank Fabozzi. In their paper, they discuss, at a high-level, how data science and machine learning can help research. Paper Links: A Backtesting Protocol in the Era of Machine Learning https://alphaarchitect.com/2018/12/17/protocol-to-prevent-quants-gone-wild/ Order from Chaos: Data Science is Revolutionizing Investment Practice https://alphaarchitect.com/2018/12/18/data-science-is-revolutionizing-investment-practice/
This week Ryan and Jack discuss two editorials on machine learning and its impact and use within Research. The first paper is an Editorial by Rob Arnott, Cam Harvey, and Harry Markowitz discussing, in their opinion, proper protocols for research (back-testing) in the era of machine learning. The Second paper, summarized by Elisabetta, is by Joseph Simonian, Marcos Lopez de Prado, and Frank Fabozzi. In their paper, they discuss, at a high-level, how data science and machine learning can help research. Paper Links: A Backtesting Protocol in the Era of Machine Learning https://alphaarchitect.com/2018/12/17/protocol-to-prevent-quants-gone-wild/ Order from Chaos: Data Science is Revolutionizing Investment Practice https://alphaarchitect.com/2018/12/18/data-science-is-revolutionizing-investment-practice/
Startuprad.io - The Authority on German, Swiss and Austrian Startups and Venture Capital
You are listening to the audio track of a video interview from Euro Finance Tech 2018: https://www.startuprad.io/blog/investsuite-is-a-wealthtech-startup-which-offers-personalized-advice/ In this interview, Startuprad.io talks to Joeri Van Cauteren (https://www.linkedin.com/in/joeri-van-cauteren-b2306117/) – Growth Product Manager and Hederik Laloo – Growth Manager (https://www.linkedin.com/in/hederiklaloo/) both working at the Belgian based startup Investsuite (https://www.investsuite.eu/). Investsuite is a wealthtech startup, which offers personalized advise for investments below the usual wealth management thresholds, often at 250.000 US$ or more https://www.investopedia.com/articles/professionals/111715/private-banking-vs-wealth-management-not-quite-same.asp. The focus of Investsuite is more on safety than on return. Learn more about their venture capital investment here: https://siliconcanals.nl/news/startups/seed-for-digitisation-this-belgian-wealthtech-startup-raises-e2m-for-rd/ We are media partners of Euro Finance Tech and we have been there to talk to some startups for you. We really enjoyed Euro Finance Tech, you will find some outtakes during our 12 days of Christmas and you can also have a look at our Instagram profile https://www.instagram.com/p/BqKMohindtd/ During this interview we talk about: Markowitz Portfolio Theory: https://www.investopedia.com/terms/m/modernportfoliotheory.asp by Harry Markowitz https://en.wikipedia.org/wiki/Harry_Markowitz Normal distribution: https://en.wikipedia.org/wiki/Normal_distribution Value at risk: https://en.wikipedia.org/wiki/Value_at_risk Conditional value at risk: https://de.wikipedia.org/wiki/Conditional_Value_at_Risk Joern wanted to ask for the Power Ball numbers, not the Super Bowl numbers … sorry, but they would have been on Sat, Nov 17, 2018: 8, 6, 68, 20, 52, 5 Find the takeouts here: https://youtu.be/Ql56-DAiP1c
Investing can be grim. Each day’s news and analysis merely add to our list of worries. But the father of Modern Portfolio Theory, Harry Markowitz, offers a rare upbeat image of investing, through Antonio in Shakespeare’s Merchant of Venice. BlackRock’s annual Global Investor Pulse survey tell a similar story.
On this week's show we discuss the college admissions bribery scandal, does it matter where you went to college, how the tech companies can help in higher education, CalPERS is making a bigger push into private equity, the expectations gap in retirement, lifestyle creep, how corporate trauma impacts individual stocks, the new Harry Markowitz portfolio is a tad odd, how automation will impact jobs in the future for young people and much more. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at animalspiritspod@gmail.com with any feedback, questions, recommendations, or ideas for future topics of conversation.
This episode was recorded on February 9, 2019. Don discussed the free steak dinner he was to attend (and did on February 12th) and warns against buying into these kinds of pitches. He also takes calls on the wisdom of borrowing against a 401(k), universal life Insurance, interest rates, and more. He also the merits of a few advisory firms. The seminar that Don will be attending next week. Borrowing against your 401(k). Why Don hates universal life Insurance and a simple alternative. How many stocks and bonds should you own? Comparing Vanguard, Fisher, and Vestory. Predicting rising interest rates. Talking Real Money Twitter — https://twitter.com/talkrealmoney Financial Fysics on Amazon – https://www.amazon.com/Financial-Fysics-Money-Investing-Really/dp/1453898557 Vestory — https://vestory.com/ Vanguard — https://investor.vanguard.com/corporate-portal/ Bankrate — https://www.bankrate.com/ 401k Loan Calculator — https://www.bankrate.com/calculators/retirement/borrow-from-401k-calculator.aspx Jordan Goodman — https://www.moneyanswers.com/ Harry Markowitz — http://hmarkowitz.com/ Paul Samuelson — https://www.nobelprize.org/prizes/economic-sciences/1970/samuelson/biographical/ Eugene Fama — https://www.econlib.org/library/Enc/bios/Fama.html Ken French — http://mba.tuck.dartmouth.edu/pages/faculty/ken.french/
This is a reflection on some episodes from 2018. The themes I have chosen looks at growing up in the Great Depression and what to expect in the future with AR and AI, as well as Institutions, Individualism, Cooperation and Reciprocity. Featured episodes are: 123 Vernon Smith on his early childhood years during the Great Depression and how they survived by moving to live on a farm before losing it all, his mother as a socialist and who she voted for in the Presidential elections in 1919 when women were first given the right to vote in the US. 162 Jennifer Burns on Ayn Rand's views on Capitalism, Communism and Christianity and why the individual is better that the collective, the virtues of selfishness, hippies in the 1960s, Objectivism, Existentialism and Nietzche. 147 Ngaio Hotte on Elinor Ostrom’s work on collective action and cooperation to reach mutually beneficial outcomes and how this can relate to natural resource problems as well as Ostrom’s observation of reciprocity in Game Theory. 135 David Zetland on group cooperation to protecting public goods such as the water supply and the environment and how cooperation rewards and benefits groups. 168 Harry Markowitz on growing up with the family grocery store during the Great Depression in an upper middle-class area, using the museums and libraries of Chicago as a teen, Darwin’s ‘Origin of Species’ as an influence and how reading the great philosophers and his self-study of the physical sciences helped with his placement at the University of Chicago. 125 Eugene Fama on his early academic year to the development of the Efficient Market Hypothesis as well as the Benoit Madlebrot's discovery of Louis Bachelier's paper 167 James Kenneth Galbraith on the influences of his father John Kenneth Galbraith on his own academic work in economics and the significance or lack of significance of economics in academia today. 136 Abby Hall on the growth of big government since 9/11 and the militarisation of the domestic police force in the US from the creation of the first US SWAT team during the US occupation of the Philippines in 1898. 149 Soumaya Keynes on why trade should not be blamed for the loss of jobs, the Economic Consequences of Our Grandchildren by Soumaya’s great grand uncle John Maynard Keynes, trade blocs in the 1930s compared to todays global trading systems to remove barriers and maintain peace. 156 Peter Boettke on how F. A. Hayek developed his interest in economics through the Viennese culture and the intellectual hubs which were based on law, philosophy and politics and the mentors he encountered as well as Hayek’s observations of the nature of macro volatility, the growth of government, technology and inhumanity during his life. 163 Kevin Kelly on technology of the future such as AI and AR to help to quantify and track our movements and expressions to help with our decision-making.
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In this podcast, MarketFox columnist Daniel Grioli speaks with Research Affiliates founder and chairman Rob Arnott about his research into factors and addresses the criticism that AQR founder Cliff Asness had on his factor timing paper. He makes the case you certainly can time factors and that to sell out of value now, while it is the only factor that is cheap, seems not the best thing to do. He also believes that the industry will undergo significant change, but that machine learning is largely useless for long horizon investing. The three papers discussed in the podcast are: * How Can 'Smart Beta' Go Horribly Wrong? * Timing 'Smart Beta' Strategies? Of Course! Buy Low, Sell High! * Is Your Alpha Big Enough to Cover its Taxes? 3:00 Considering Astrophysics 4:30 Was a quantitative approach unusual in the early days? 5:45 A lot of quant go wherever the numbers lead them 8:15 Shockingly often conventional wisdom turns out not to be true when you test it 11:55 Higher dividend is higher earnings growth 17:15 Buybacks are smoke and mirrors to disguise management remuneration 18:05 What risk premium is normal? 24:15 You will never buy a bargain if you never buy what is out of favour, what is unloved. 24:45 Get people of their fixation with past returns 26:43 The spread between growth and value is wider than historic average. This means either a new normal or that value is a bargain. 31:00 The small cap effect is driven by the 2 or 3 per cent superstar winners. 31:45 Discussing the war of words with Cliff Asness 34:00 People are pouring money into multi-factor strategies, because they are tired of waiting for value to work. 36:00 Low volatility is trading at a premium, whereas historically it has traded at a discount. And people think they have less risk…? 37:45 Four of the five factors are pushing you into an anti-value direction 39:55 When momentum is chasing these bubble stocks you are slightly more likely to have a crash in momentum 42:00 If you must invest in the US, have a defensive stance 48:00 Those who say that factor timing doesn’t work, just have not done their homework 50:00 The big failing of the quant communitie is that we view everything as a signal, instead of viewing it as an asset 56:30 Talking ETFs 58:45 My next paper with Cam Harvey and Harry Markowitz looks at how you can screw yourself up with quantitative methods 59:55 Any research is data mining, but not all data mining is research 1:01:15 The quant community is engaged in performance chasing without realising it, for the most part 1:01:30 Start with a principal, start with a hypothesis, then test the hypothesis. Don’t go back to the same data again and again and tweak the process. 1:02:30 Machine learning is going to be useless for long horizon investing 1:08:10 The Future of the Financial Industry and discussing zero fees
Dr. Harry Markowitz is the principal of Markowitz Company, and an adjunct professor at the Rady School of Management, UCSD. Harry has applied computer and mathematical techniques to various practical decision making areas. In recognition of his work, Harry received the 1989 Von Neumann Award from the Operations Research Society of America for his work on portfolio theory, sparse matrix techniques and the SIMSCRIPT simulation programming language. In 1990 he shared The Nobel Prize in Economics for his work on portfolio theory. Check out www.economicrockstar.com/harrymarkowitz for links, books and resources mentioned in this episode. Support the show for as little as $1 per month over at www.patreon.com/economicrockstar
Daniel Peris is author of “Getting Back to Business: Why Modern Portfolio Theory Fails Investors and How You Can Bring Common Sense to Your Portfolio” and a portfolio manager at Federated Investors. Before transitioning into asset management, Peris was a historian focused on modern Russian history, but now self identifies as a business investor. Daniel’s clients tend to be more conservative investors that approach markets from a business perspective rather than a passive investment approach. His main focus is to help clients make better business like decisions about markets. Not everyone has the time or desire to be an active investor, however Daniel hammers the point that if you don’t want to take responsibility for your own trading, there are plenty money managers for hire that will align with investors needs. Daniel has strong views on economic practices like the efficient market hypothesis (Eugene Fama) and modern portfolio theory. Daniel sees the modern portfolio theory as particularly outdated. Modern portfolio theory was a hypothesis developed by Harry Markowitz in his paper “Portfolio Selection,” published in 1952. It is an investment theory that investors can build portfolios to optimize or maximize potential return based on a prescribed level of risk within the market. This theory governs the typical investors portfolio and is the most influential economic theory in finance and investment today. Daniel argues in his book and on the podcast that this system was developed in the 50’s and does not connect to 2018 investing. In this episode of Trend Following Radio: Modern portfolio theory Efficient market hypothesis Value investing Momentum investing Diversification Portfolio selection Defining risk
Monte Carlo simulations take a huge amount of data and possible variables and let you know the chance of a specific outcome. Financial planners use Monte Carlo simulations to look at all sources of cash flow, income from investments, possible market scenarios and predict whether you’ll “make it” in retirement. Watch a short video about Monte Carlo simulations. While Monte Carlo simulations are a starting point to financial planning, Doug’s interview with Dr. Harry Markowitz titled Can Modern Portfolio Theory Make You a Better Investor? highlights all the options. Can you predict what your financial future will look like? Creating a financial plan Before you begin your financial plan, make sure to download the free resource What Checklist Do I Need for a Financial Plan? The list outlines all the questions a financial advisor asks. Start thinking critically about your finances. Download What Checklist Do I Need for a Financial Plan? Download free resource: What Checklist Do I Need for a Financial Plan? If you’re not already receiving updates on new episodes, sign up now, and as a special bonus, receive Doug’s free ebook The Retirement Planning Book.
Heute geht es um das Thema „wie du mehr Sicherheit beim Investieren erreichst“. Dafür gibt es zwei Optionen. Die 1. Möglichkeit ist Diversifikation. Also die sinnvolle Streuung von Risiken. Darüber habe ich aber schon in der 2. Folge sehr ausführlich gesprochen, deswegen gehen wir heute auf die andere Möglichkeit genauer ein. Die 2. Möglichkeit ist stufenweise Zinspapiere, also Anleihen dem Depot hinzuzufügen. Kurzer Exkurs was eine genau eine Anleihe ist: eine Anleihe ist sozusagen ein Kredit den du, in den meisten Fällen einem Staat oder einem Unternehmen verleihst. Die Laufzeit, die Zinszahlungen und auch die Rückzahlung sind fest vereinbart. Solange Schuldner zahlt ist das ein relativ sicheres Geschäft. Daher ist der Anleihenmarkt auch wesentlich weniger anfällig für Wertschwankungen, als der Aktienmarkt. Das Mischen von Aktien mit Anleihen bringt im Depot drei wesentliche Vorteile: Die Rückgänge sind viel kleiner und die Zeit bis zum Aufholen des Rückgangs ist viel kürzer. Was das genau heißt seht ihr gleich, wenn wir uns die Marktdaten anschauen. Die Rendite reduziert sich nicht so stark wie das Risiko. Dies beschreibt der Diversifikationseffekt, den Harry Markowitz nachgewiesen hat und wofür er u. a. dem Nobelpreis erhalten hat. Man ist wesentlich flexibler bei Marktrückgängen. Wir wissen vom Aktienmarkt, dass 3 von 10 Jahren eine negative Rendite aufweisen, aber wann diese genau sind, wissen wir nicht. Wenn Aktien wirklich mal um 20% oder mehr fallen sollten, kann man die Anleihen einfach reduzieren und günstig in Aktien einsteigen und so sogar einem Rückgang profitieren. Das ist übrigens kein Markt Timing, weil wir nicht aufgrund einer Prognose proaktiv investieren, sondern wir reagieren nur auf vorliegende Fakten und Marktgegebenheiten. Die Portfolioänderung ist nicht kurzfristig angedacht, sondern als längerfristige Allokationsentscheidung. Was wäre also die optimale Aktien/Anleihen Mischung für Dein Depot? Das häng von deiner Risikoneigung (letzte Folge behandelt) und deinen Anlagezielen ab. Viele meiner Kunden sind Ü50 oder Ü60, sechs- oder siebenstellige Beträge zur Veranlagung. Da ist das Anlageziel ganz anderes als bei einem 20- oder 30-Jährigen. Es geht um Kapitalerhalt, Inflationsausgleich und laufende Einkünfte erzielen. Für diese Leute, sind z.b. hohe Aktienquote weniger gut geeignet, als bei einem 30-Jährigen, der mit dem Studium fertig ist. In den ersten zwei Folgen habe ich viel über schlechte Erfahrungen und Verluste geredet, die Anleger in der Vergangenheit erfahren haben, weil sie teuer gekauft und billig verkauft haben. Also aus emotionalen Gründen in den Crash hinein verkauft. Meines Erachtens passiert das, weil die Anleger schlecht vorbereitet wurden. Im Vertrieb wird es vermieden über Kosten und Risiken zu sprechen. Ich bin eher ein Fan davon das Depot darauf aufzubauen, damit es der Anleger langfristig durchzeihen kann. An dieser Stelle möchte ich meinem selbst auferlegten Bildungsauftrag nachkommen und habe euch die historischen Marktdaten mit Renditen, Rückgängen und Schwankungsbreiten aufbereitet. Ihr könnt sie auf meiner Homepage www.benediktbrandl.com kostenlos downloaden. Jeder der Investiert sollte sie kennen, weil er sonst Gefahr läuft überrascht zu werden. Werfen wir einen Blick in die Marktdaten. Sie reichen von 1988 bis heute, also über die letzten 30 Jahre. Das 100% Aktienportfolio in Form des weltweiten MSCI All Country Index mit über 2.400 Aktien hat genau 9,75% jährliche Wertsteigerung erzielt. Hätte man vor 30 Jahren 100.000 EUR in diesen Index investiert wären das heute 1,5 Mio Euro. Bei 10.000 wären es 150.000 EUR. An der Stelle muss ich aber gleich einen Disclamer hinterher schieben: „historische Anlageergebnisse sind keine Garantie für die zukünftige Entwicklung oder Renditen“. Es kann also auch auf 30-jährige Zeiträume einmal schlechter laufen. Allerdings hat der S&P500 von 1926 bis 2018 exakt 10,0% durchschnittliche Rendite abgeworfen. Ein besonders guter Ausreißer war das daher nicht. ABER der Weg war mit erheblichen Schwankungen verbunden. -40% war das schlechteste Jahresergebnis, und es dauerte 51 Monate, also 4 ¼ Jahre bis der Verlust wieder kompensiert war. Seit 1926 gab es das übrigens insgesamt 6 Rückgänge dieser Art und teilweise hat es auch 10 Jahre und mehr gedauert, bis er wieder aufgeholt war. Wer die nötige Zeit und die mentale Stärke mitbringt, hat der kann auch zu 100% in Aktien investieren. Wer einen kürzeren Anlagehorizont hat, oder Wertschwankungen in dem Ausmaß nicht haben will, der muss eine vorsichtigere Mischung wählen. Das 60er Portfolio hat übrigens 8% Rendite gemacht die letzten 30 Jahre, bei einem höchsten Jahresrückgang von nur 21% und die Unterwasserzeit in der Finanzkrise waren nur 28 Monate also 2,3 Jahre. Wer es noch vorsichtiger haben will, kann sich noch die Mischung mit 40% Aktien und 60% Anleihen ansehen. Beim 40er Portfolio waren es 6,8% Rendite bei einem Jahresrückgang von 12,5% in der Finanzkrise und da hat es 25 Monate gedauert bis wieder alles im grünen Bereich war. Also komplett unterschiedliche Portfolioeigenschaften wie bei ausschließlichen Aktienportfolios. Allerdings muss man auch sagen, dass sich das derzeit niedrige Zinsniveau auch auf die Aktien und Anleihen Renditen auswirken wird. Ich würde sowohl für Anleihen als auch für Aktien die Renditeerwartung über die nächsten 10 Jahre ca. 2 - 3 % niedriger ansetzen. Was aber immer noch wesentlich höher ist als auf dem Tagesgeld. Macht euch vor dem Investieren mit den Marktschwankungen vertraut (die findet ihr auf meiner Homepage) und dann findet eine Mischung, zu euch und eurem Anlageziel passt. Vielen Dank fürs zuhören, ich freu mich wenn ihr wieder dabei sei. Bis dann!
Throughout The Black Swan, Nassim Nicholas Taleb bemoans the prevalence of Gaussian functions, perhaps known best graphed as characteristic bell curves. Much of the natural world sorts itself into a bell curve (see also the 80/20 “rule,”) but if we expect everything to fall within a Gaussian framework, we will be continually surprised by real life. Consider my previous discussion of casino risk management. The games are all statistically reliable and predictable, but the biggest risk to its business come from non-gaming threats. The desire to fit nature into a probabilistic straight-jacket has infected the Nobel Prize in Economics, much to Taleb's chagrin: …True, the prize has gone to some valuable thinkers, such as the empirical psychologist Daniel Kahneman and the thinking economist Friedrich Hayek. But the committee has gotten into the habit of handing out Nobel Prizes to those who “bring rigor” to the process with pseudoscience and phony mathematics. After the stock market crash, they rewarded two theoreticians, Harry Markowitz and William Sharpe, who built beautifully Platonic models on a Gaussian base, contributing to what is called Modern Portfolio Theory. Simply, if you remove their Gaussian assumptions and treat prices as scalable, you are left with hot air. The Nobel Committee could have tested the Sharpe and Markowitz models—they work like quack remedies sold on the Internet—but nobody in Stockholm seems to have thought of it. Nor did the committee come to us practitioners to ask us our opinions; instead it relied on an academic vetting process that, in some disciplines, can be corrupt all the way to the marrow. After that award I made a prediction: “In a world in which these two get the Nobel, anything can happen. Anyone can become president.”1 I think maybe he was on to something… Taleb, Nassim Nicholas. The Black Swan: Second Edition: The Impact of the Highly Improbable (Incerto). New York: Random House, 2012. Kindle link. ↩︎ With the Grain is supported by listeners like you.If you'd like to hear more from Potatowire and other Difficult Podcasts hosts, visit http://difficultpodcasts.fm/support and subscribe today.Besides supporting the work you love and keeping it ad-free, you'll gain admission to the Difficult Podcasts Slack channel where you can chat with your favorite hosts, tell us what you think, and help us improve future episodes.Thanks for listening.
Want to learn about a solid strategy to diversify your investments? Doug recalls his interview with Nobel Prize winner Dr. Harry Markowitz about Modern Portfolio Theory. The conversation gave practical advice about using market analysis to find the right investments for a well-diversified portfolio. (Listen here to their discussion) If you don’t want to build a diversified portfolio by yourself, you can work with a money manager. Investors should interview money managers and ask what diversifying strategies they use. A risk-return analysis is essential in today’s market Jesse Felder, the creator The Felder Report, expresses concerns about the current bull market. Jesse has a long history on Wall Street and he has seen investment trends come and go. What will happen now? He points to the expertise of shrewd investors like Warren Buffett to learn a strategy that is evergreen, yet flexible with the market changes. Traditional methods of investment are changing and investors need to be realistic with their investment expectations. Follow Jesse Felder on Twitter @jessefelder and at his website The Felder Report. If you’re not already receiving updates on new episodes, sign up now, and as a special bonus, receive Doug’s free ebook The Retirement Planning Book. Also, if you want to learn more about being strategic in your investments, then read Doug’s co-authored book Rich as a King.
Denise Shull is a performance and decision coach to traders and athletes. She is well known for her effectiveness in assessing performance under high pressure situations. Denise began her Wall Street career in 1994 as trader and desk manager on the Chicago Board Options Exchange. She was always fascinated by the psychology side of trading from the outset of her trading career. In 2015 she offered critical insight on how to put together one of the main characters of the hit show “Billions” on Showtime. Denise has counseled an extremely wide variety of traders with all kinds of personalities and trading styles. However, at the end of the day everyone is human and all traders have common psychological threads which she points out. When Denise analyzes a client she tries to understand a sequence of feelings that person is making and what the patterns of their feelings are. At first it is just about her figuring out how a clients brain works, and then she helps them see the patterns. What was the trigger for Denise to go down the path of studying the mind and human behavior? Starting from a young age she enjoyed observing and counseling friends. In her mid to late 20’s she started looking at her friends relationships and seeing that the people were all different but the scenarios were the same. A teacher helped point out a theory of Freud’s. Freud believed there is a critical period for attachment and self image when you are a child. Denise gives examples of how human reactions stem from a template made in the first 2-3 years of life. Michael and Denise finish up talking fractals, psycho analytics, efficient market theory and compare notes on Nobel Prize winner Harry Markowitz. In this episode of Trend Following Radio: Bio-psychology Attachment theory Neurosciences Conviction as data Fractal emotions Efficient market theory Self blame as a positive
Mark Rzepczynski is the CEO of AMPHI Capital Management and has a deep knowledge of trading, especially trend following trading. Simplicity beats complexity every time. Unfortunately, people crave more complex. With trend following, traders keep it simple. They just want to get the direction of the trade right. Trend followers don’t care about what the price will be or how far it will go, they just go back to the basics and see what way the trend is going, up or down. The ability to simply follow the math has always been undervalued. Risk management is about the math of selling losers and hanging onto winners. It isn’t hard math to do, but this is what separates successful managers from losing ones. Successful managers build a portfolio, follow the trends and execute trades properly. Harry Markowitz said, “If I would have created CAPM around semi variance no one would have understood the math and I would not have won the Nobel Prize.” Mark breaks this quote from Markowitz apart. He dives into good volatility vs bad volatility. Fake news has been the premise of the 2017 presidential election. But is fake news new? Every time you see a government announcement come out saying they are revising their data, that is fake news. GDP numbers, unemployment, etc. are examples of fake our outdated news that cannot be depended on. We know that prices move and fluctuate from day to day, but trend followers can do things to smooth the uncertainty and prepare with a toolbox of rules such as staying diversified and having crisis alpha. In this episode of Trend Following Radio: Controlling volatility Style diversification Long term vs. Short term managers Simplicity beats complexity Quant trading
本期由Yixue主持，Alfred同学分享了现代投资组合理论的产生与发展，主要介绍了Harry Markowtiz先生在投资组合选择方面所作的贡献，即大家所熟知的有效前沿。随后又介绍了William Sharpe先生在资产配置理论以及CAPM领域的贡献。 CORE TOPICS: 现代投资组合理论、均值方差分析、CML、CAL、两基金分离定律、系统性风险、CAPM SHOW NOTE: Harry Markowitz 可证伪性 无差异曲线 最优化 Modern portfolio theory Fortan CAPM What is Dr. Harry Markowitz Doing Today? Merton Miller William F. Sharpe Portfolio Selection Portfolio Selection: Efficient Diversification of Investments An Hour with Harry Markowitz, Father of Modern Portfolio Theory Risk Measures in Quantitative Finance Mutual fund separation theorem 更多内容请访问:www.quant.fm
How Modern Portfolio Theory Can Make You a Better Investor By Douglas Goldstein, CFP® Can “Modern Portfolio Theory” increase your investment returns? Recently, on The Goldstein on Gelt Show, I spoke with the inventor of Modern Portfolio Theory, Nobel Prize in Economics winner, Dr. Harry Markowitz. Dr. Markowitz explained various aspects of Modern Portfolio Theory and its impact on the individual investor. His theory explains how to construct an investment portfolio by optimizing expected returns based on the level of market risk. The goal is to help investors construct portfolios to maximize returns while limiting risk as much as possible. By combining various asset classes in one portfolio, Markowitz explains, the overall account may have a lower volatility and higher return than a portfolio that isn't properly optimized. Can theories really help investors? When investors are faced with market upheaval, they often panic and lose confidence. When I asked Dr. Markowitz how to advise clients during turbulent markets, he spoke about the common mistakes that individual investors make: “The chief error that the small investor makes is buying when the market has gone up and he assumes it's going to go up further, and then he sells when the market has gone down and he thinks it's going to go down more.” He contrasted this investing model to using Modern Portfolio Theory to rebalance your portfolio to reflect market conditions. If used in the right way, MPT can be effective in turbulent times. When I speak with clients about their U.S. brokerage accounts or their investments in the Individual Retirement Accounts (IRAs), I realize that it's difficult for them to look objectively at their own money. We all have our emotions tied up in our net worth. But when money managers use MPT to design a portfolio, it can help remove some of the emotional bias that might wrongly influence the way people invest. To find out more about Modern Portfolio Theory, listen to our discussion at: http://www.goldsteinongelt.com/markowitz Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.
Nobel Prize winner Harry Markowitz, pioneer of modern portfolio theory, explains his theory on how to decide to make the best move. Doug speaks with Harry Markowitz about similarities between chess and investing, and how to make successful decisions.
My guest today is Campbell Harvey, a finance professor at Duke university, and research associate with the National Bureau of Economic Research in Massachusetts. His research papers on these subjects have been published in many scientific journals. The topic is Trend Following. In this episode of Trend Following Radio we discuss: Survivorship bias, and not being fooled by randomness Why people with higher risk tolerance experience much higher upsides Understanding process vs. outcome The difference between volatility and skew The importance of recognizing that asset returns are rarely “normally distributed” When it is appropriate to apply a general framework, and when it is not The Sharpe ratio – is it always relevant? Harry Markowitz, Jim Simons, and Nassim Taleb Jump in! --- I'm MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I'm proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show. To start? I'd like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/ You can watch a free video here: https://www.trendfollowing.com/video/ Can't get enough of this episode? You can choose from my thousand plus episodes here: https://www.trendfollowing.com/podcast My social media platforms: Twitter: @covel Facebook: @trendfollowing LinkedIn: @covel Instagram: @mikecovel Hope you enjoy my never-ending podcast conversation!
There is a common problem in finance when it comes to evaluating investment managers’ performance: the factor or skill vs. luck. When a manager performs well over a number of years, it is not clear whether the success can be attributed to the manager’s skill and strategy, or random luck. And vice versa, when a manager performs badly, it can be difficult to pin-point whether it was due to lack of skill, or simply bad luck. Another factor that is commonly misunderstood in finance is risk. Understanding the differences between risk, volatility, and skew is essential to developing a well-performing trading strategy. Campbell Harvey studies these phenomena. He is a finance professor at Duke university, and research associate with the National Bureau of Economic Research in Massachusetts. His research papers on these subjects have been published in many scientific journals. In this episode, Campbell Harvey and Michael Covel discuss risk tolerance, evaluating trading strategies, Harry Markowitz’ classic paper on portfolio selection, and the importance of differentiating between volatility and skew. In this episode of Trend Following Radio: Survivorship bias, and not being fooled by randomness, Why people with higher risk tolerance experience much higher upsides, Understanding process vs. outcome, The difference between volatility and skew, The importance of recognizing that asset returns are rarely “normally distributed”, When it is appropriate to apply a general framework, and when it is not, The Sharpe ratio – is it always relevant?, Harry Markowitz, Jim Simons, and Nassim Taleb. For more information and a free DVD: trendfollowing.com/win.
"We do something that is very complex." - Oliver Steinki (Tweet) In the second part of our conversation with the cofounder of Evolutiq, we dive into the firm's trading strategy, how they manage risk, and what kinds of investors they seek. He also discusses tips for budding entrepreneurs and firm managers, and how he deals with explaining the complexity of his trading models. Thanks for listening and please welcome back Oliver Steinki. Subscribe on: In This Episode, You'll Learn: The details of Oliver’s portfolio. What types of markets have more success for their models. Their unique allocation process. How to explain these scientific terms to potential investors. "We don’t enter any position without an attached trading stop." - Oliver Steinki (Tweet) The question of simplicity vs. complexity. How they managed intra-day forecasting. How he manages risk. The way that market correlations play into the portfolio. "We are really uncorrelated because we have long and short positions on a lot of different markets." - Oliver Steinki (Tweet) Oliver’s thoughts on drawdowns and the worst ones that he is expecting. How do you know when a model has stopped working. What Oliver’s experience has been as the world has become more divergent. What keeps him up at night. "I probably worry to much. But hopefully over your whole career you worry too much but nothing happens, which is much better than being over-confident." - Oliver Steinki (Tweet) What he is looking at in his research for the firm right now. "Since we are research guys, we believe in constant improvement of the existing processes." - Oliver Steinki (Tweet) How models can start decaying. Who he is targeting for his firm. How he manages the cash portion of his accounts. How setting up a company outside the big financial center affects his business. What questions investors should be asking him during due diligence meetings. The advice he would give to aspiring managers. "One shouldn’t underestimate the time you need to spend to get the infrastructure and regulation right." - Oliver Steinki (Tweet) Resources & Links Mentioned in this Episode: Oliver recommends reading The Mathematics of Money Management. He also recommends Algorithmic Trading. Learn more about Harry Markowitz, mentioned in this episode. This episode was sponsored by Eurex Exchange: Connect with Evolutiq: Visit the Website: www.Evolutiq.com Call Evolutiq: +41 55 410 7373 E-Mail Evolutiq: sales@evolutiq.com Follow Oliver Steinki on Linkedin "If you have a good business model, you need good endurance to go through the negative periods and always turn up again." - Oliver Steinki (Tweet)
Want to start investing but a little nervous to get started? We totally get it. Investing should be simple and easy and with Acorns you can get started with just some pocket change. Acorns is a great way to start investing and building wealth. We’re here to show how you how to get started investing without a lot of money, and then forget about it until you retire. What is Acorns? Each time you spend, Acorns rounds up to the nearest dollar and invests that amount for you. So, if you spend $2.50 on a cup of coffee, Acorns will automatically invest $.50 for you. The pizza you just ordered that cost $15.05, $.95 gets invested. All you need to do is download the Acorns app, connect it to your credit cards to get started. A lot of users are new to investing so the app provides a lot of guidance. There are also cool tools, that help you set and reach goals. By just entering your savings goals and what age you want to achieve them by and the app tells you how much you need to invest each month to get there. They also have found money partners program that rewards app users for shopping through certain retailers. When you making a purchase with one of their partners through the app or web portal, the retailer will send the rebate, cash back rewards, and loyalty programs cash into your account. What’s better than cash back? Cashback that is automatically invested. So, is pretty simple but let’s go a bit deeper. Advantages of Using the Acorns App They offer ETF’s, stock funds, and bond funds. The funds are chosen by a team of mathematicians and engineers who work in conjunction with Nobel Prize-winning economist Harry Markowitz. There are no commissions, the cost is $1 per month and a maximum of .5% a year on managed assets. Once you reach $5000, the percentage drops to .25%. There is no fee to add money or withdraw it from the account. Using Acorns is safe, your data is encrypted and they are working with “white hackers” to make sure that everything is private. You can maintain a high degree of control in Acorns but if you want to set it and forget it, you can choose auto roundups where each transaction will be rounded up. You can also have money auto deposited into the account via automatic transfer. Her are the top benefits of using the Acorns app: Fee exemptions The Acorns platform appeals to young people and those who do not have investment experience. It allows college students to register for Acorns for free for up to four years, so long as they sign up with a .edu email address. This makes it easy for students to focus on investing and building up wealth without worrying about account fees when they first start with Acorns. Cashback Investing your money little by little can really make a difference over time, especially when you have Acorns’ cash-back features to help you along. The app has more than 100 partner companies offering cash back on purchases you make with one of the payment methods associated with your Acorns account. These cash-back rewards will go into your investment account to help you move closer to your goals. Minimal upfront investment Some financial institutions require individuals to invest thousands of dollars just to open an account. With Acorns, you can start investing with just $5—and there’s no minimum amount required to open an account. This opens up investment opportunities to people who may not have otherwise had access to them. Learn more about your ad choices. Visit megaphone.fm/adchoices
My guest today is Harry Markowitz, the third Nobel Prize winner to appear on this podcast. Markowitz is an American economist who received the 1989 John von Neumann Theory Prize and the 1990 Nobel Memorial Prize in Economic Sciences. Markowitz is a professor of finance at the Rady School of Management at the University of California, San Diego. The topic is modern finance. In this episode of Trend Following Radio we discuss: Justin Fox and “The Myth Of The Rational Market” Markowitz's beginnings, and the Nobel Prize Markowitz's 1952 paper How Markowitz felt about some of his prescriptions and ideas being interpreted into dogma Why Wall Street was not interested in Markowitz's theories at one time Diversification for the right reason Markowitz's new four-volume book Advice on maintaining mental acuity at an advanced age and sounding like you're 35 when you're 86 years young Markowitz's attraction to the philosopher Hume If it was fifty years later, if Markowitz would be a quant running a hedge fund today Markowitz's legacy On being comfortable vs. being rich The leveraged long-only hedge fund industry and being coaxed into putting your money into these institutions Long Term Capital Management and portfolio theory Jump in! --- I'm MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I'm proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show. To start? I'd like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/ You can watch a free video here: https://www.trendfollowing.com/video/ Can't get enough of this episode? You can choose from my thousand plus episodes here: https://www.trendfollowing.com/podcast My social media platforms: Twitter: @covel Facebook: @trendfollowing LinkedIn: @covel Instagram: @mikecovel Hope you enjoy my never-ending podcast conversation!
Today on the podcast Michael Covel talks with Harry Markowitz, the founder of modern finance and Nobel Prize winner. Markowitz also appeared in Covel’s documentary film a few years back, “Broke: The New American Dream”. Covel and Markowitz talk about Justin Fox and “The Myth Of The Rational Market”; Markowitz’s beginnings, and the Nobel Prize; Markowitz’s 1952 paper; how Markowitz felt about some of his prescriptions and ideas being interpreted into dogma; why Wall Street was not interested in Markowitz’s theories at one time; diversification for the right reason; Markowitz’s new four-volume book; advice on maintaining mental acuity at an advanced age and sounding like you’re 35 when you’re 86 years young; Markowitz’s attraction to the philosopher Hume; if it was fifty years later, if Markowitz would be a quant running a hedge fund today; Markowitz’s legacy; on being comfortable vs. being rich; the leveraged long-only hedge fund industry and being coaxed into putting your money into these institutions; Long Term Capital Management and portfolio theory. What a life! Want a free trend following video? Go to trendfollowing.com/win.
My guest today is Justin Fox, an American financial journalist, commentator, and writer born in Morristown, New Jersey. He is a Bloomberg Opinion columnist and former editorial director of the Harvard Business Review Group and business and economics columnist for Time magazine. The topic is his book The Myth Of The Rational Market: A History of Risk, Reward, and Delusion on Wall Street. In this episode of Trend Following Radio we discuss: Harry Markowitz, Bayesian statistics, and making smart decisions in an uncertain world using quantitative tools Stocks, beta, and the importance of making useful predictions Commodities Corporation and trend following trading in the early 1970's Why a market in which everyone was rationally anticipating the future would be a random market Amos Hostetter How the behavioral mindset started to unfold in the 1970's Eugene Fama and the efficient market hypothesis The Capital Asset Pricing Model Why well-designed markets and well-informed investors are prone to manias and panics Individuals making errors vs. the group getting it right Jump in! --- I'm MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I'm proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show. To start? I'd like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/ You can watch a free video here: https://www.trendfollowing.com/video/ Can't get enough of this episode? You can choose from my thousand plus episodes here: https://www.trendfollowing.com/podcast My social media platforms: Twitter: @covel Facebook: @trendfollowing LinkedIn: @covel Instagram: @mikecovel Hope you enjoy my never-ending podcast conversation!
Michael Covel speaks with Justin Fox. Fox is the executive editor at the Harvard Business Review Group. He writes a blog for hbr.org (http://blogs.hbr.org/fox/) and a monthly column for Time magazine. Fox is also the author of "The Myth Of The Rational Market: A History of Risk, Reward, and Delusion on Wall Street". Covel and Fox discuss Harry Markowitz, Bayesian statistics, and making smart decisions in an uncertain world using quantitative tools; stocks, beta, and the importance of making useful predictions; Commodities Corporation and trend following trading in the early 1970’s; why a market in which everyone was rationally anticipating the future would be a random market; Amos Hostetter; how the behavioral mindset started to unfold in the 1970’s; Eugene Fama and the efficient market hypothesis; the Capital Asset Pricing Model; why well-designed markets and well-informed investors are prone to manias and panics; and individuals making errors vs. the group getting it right. Justin Fox can be found on Twitter at @foxjust or on the web at byjustinfox.com.
In this lecture, Professor Shiller introduces mean-variance portfolio analysis, as originally outlined by Harry Markowitz, and the capital asset pricing model (CAPM) that has been the cornerstone of modern financial theory. Professor Shiller commences with the history of the first publicly traded company, The United East India Company, founded in 1602. Incorporating also the more recent history of stock markets all over the world, he elaborates on the puzzling size of the equity premium. very high historical return of stock market investments. After introducing the notion of an Efficient Portfolio Frontier, he covers the concept of the Tangency Portfolio, which leads him to the Mutual Fund Theorem. Finally, the consideration of equilibrium in the stock market leads him to the Capital Asset Pricing Model, which emphasizes market risk as the determinant of a stock’s return. Complete course materials are available at the Open Yale Courses website: http://oyc.yale.edu This course was recorded in Spring 2011.
Nobel Laureates Robert Engle, Roger Tsien, Mario Molina and Harry Markowitz present synopses of their award-winning work and engage in a lively discussion on what it takes to move forward on promising ideas. This event is part of the Innovation Day Expo and Symposia (IDEaS) held in honor of UC San Diego’s 50th anniversary. Series: "IDEaS" [Public Affairs] [Science] [Show ID: 20830]
Nobel Laureates Robert Engle, Roger Tsien, Mario Molina and Harry Markowitz present synopses of their award-winning work and engage in a lively discussion on what it takes to move forward on promising ideas. This event is part of the Innovation Day Expo and Symposia (IDEaS) held in honor of UC San Diego’s 50th anniversary. Series: "IDEaS" [Public Affairs] [Science] [Show ID: 20830]
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