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Position Sizing: Securities vs. Horses
In response to my article on Stock Picking, Market Strategy with Fundamentals, member wiinky remarked that using the volatility ratio to calculate position size was similar to something found in in horse racing.
How a 10-Year Winning Streak Ended
While we’re on the topic of lucky streaks, there is the matter of the 2010 Winter Olympics medal count predictions and how a 94 percent accuracy rate went down the tubes.
And you wonder why I don’t care what anyone says about their “performance”.
Stock Picking, Market Strategy with Fundamentals
There is a story in Bloomberg today that hedge funds based on macroeconomic strategies have had a tough time of late. Before you laugh, think about it: isn’t the average investor doing the same when he says, “The Fed’s money printing will surely lead to inflation so I will buy gold.” or “Economic power has transferred from West to East, so I’m putting my money in China.”
Fundamental Regimes
In Trader’s Workshop Research, Part 1, I presented my work on volatility. It turns out that there are also economic/fundamental regimes too.
Economics vs. Engineering
There was a discussion after How Investors Can Learn From History where I wrote about the difference between flying and finance. In the former, “no one will debate you if your actions are based on the laws of physics while, as you have personally witnessed . . . [economic and financial] opinions are subject to debate since they are based on something more ethereal. In finance, even cause and effect is not easily determined. That’s why there can be no official diagnosis or agreement on anything, and everything becomes a giant political game of the tragedy of [...]
This Week
I have two more posts in the draft box to clear and then it’s onto do the research project for the Trader’s Workshop next week.
Member Q&A: The Lost One
Whoa! Where did this stash of questions come from?
Realpolitik and the Nobel Prize
This one has nothing to do with anything other than being a good example of game theory in action.
Q&A: Signals and the 50-day MA
Oh boy, this one has been in the hopper for a very long time.
The Cooking Analogy
I once compared trading to sauteeing chicken breasts. Everyone does it, but few produce juicy results.
Big downside projections for the Dollar
A lot of articles have accumulated in the “draft” box since last fall. At this point, they have become shining examples of what people say and do at extremes of the Justin Mamis Investor Sentiment Cycle. First up is a collection of goodies from October 2009 when the Dollar was on the floor.
How Investors Can Learn From History
But they don’t, do they? The reason was made clear this week when I said to member Robert that people “Can’t do anything in advance, so [they] must wait until there is a crisis, to which he replied, “If I flew an airplane like that you wouldn’t be here.”
True enough. The problem seems to lie with the fact that people prefer engineered solutions for tasks like transportation, but somehow, not for life or finance. Since the laws of physics do not apply to “animal spirits”, there is always room for someone to say “It’s different this time.”
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