Lots of investment advice is fine in theory but ineffective in practice.

For those in any doubt, CAPE ratio says we’re in a bubble.

Investing is about betting against what is comfortable to speak on TV.

There are two types of dynamic asset allocation: convergent and divergent.

In sum, these books are about: History, Quant, and Psychology.

Certain narratives periodically dominate investor minds. And this year, one such narrative is that “inflation is coming”.

Asset owners appear to have five choices.

Static asset allocations are like the straight lines that do not bend.

Seeing losses as wins transforms investing from a nerve-wracking roller-coaster of anxiety and regret into a confident sailing through the expected ups and downs.

An eclectic collection of thought pieces we’ve enjoyed over the past two weeks.

Three paradoxes that derail investors

Given the increasing drawdown in the market, it seems prudent to revisit the notion of volatility vs risk

2019 was an especially memorable year, containing a larger than usual number of really big finance-related highlights.

Forecasts, Nowcasts and Pastcasts all have their right place in investing. The risk arises when the latter two start to disguise themselves as the first.

Comprehensive list of dynamic asset allocation academic papers

The one thing that ALL investors agree on is that another recession is coming…someday.

We focus on the Belgian Yield Inversions from 1840 to 2018.

Over the long-run, since 1877, Risk Parity’s performance looks very similar to a 60/40. However, the eye can easily miss the ‘wild swings of dispersion’ along the way.

The stock market can be a casino to some, and a solid investment to others.

The rise and fall (?) of Risk Parity is a great case study of the frameworks I have been writing about so far. We start with the concept of “Chasing Diversifiers.”

Nothing sounds simpler than earning the return of a simple 60/40 strategy, right? Just buy two ETFs at Vanguard, Global Stock and Global Bonds, for a combined 14 basis points fee, re-balance quarterly and you are done, right? The reality for most investors could not be further from this.

1.       Crashes and Low Returns (link)

2.       Low Conviction (link)

3.       Mis-Definition of “Risk” (link)

There are two kinds of randomness, one that is harmless and one that can hurt. 

Knowing which one your investments contain is important. 

A black-box ‘go-anywhere’ hedge fund = Strategy Risk

Buy and hold S&P500 for the long-run = Asset Risk

One thing has not made sense to me.

Why does the most important step of investing is in the hands of Financial Advisors and not Asset Managers?

The slope of the yield curve is one of the most talked about signals