I wanted to see what was really going on with these Smart Beta ETFs, so I dug into the numbers and found that, when you break it down, they’re mostly just taking well-known investing ideas from textbooks, giving them a new label, and then charging extra for what is basically a simple tweak to a…
When you build a portfolio using fundamental weighting, what you are really doing is making sure your investments are based on the actual size and role of each company in the real economy, instead of just following whatever stocks happen to be popular at the moment. This approach naturally helps you avoid the kind of…
Let’s talk about why, just when you really want your investments to be spread out and safe, stocks around the world tend to start moving together anyway, and how gold steps in at those moments, not because it has some deep, magical value, but because it works like a kind of mathematical shock absorber for…
Imagine looking back over the past thirty years and running every possible combination of stocks and bonds, just to see which mix would have given you the best balance between risk and reward. That’s basically what a brute-force simulation does: it tries out all the options, one by one, to figure out which approach would…
I’ve been thinking about how the Herfindahl-Hirschman Index, which basically measures how much a few big players dominate the market, can actually help us spot those moments when things have gotten so lopsided that a reversal is almost bound to happen, just because markets have a way of drifting back toward balance over time.
I’ve been looking at how passive investing has changed the way smaller companies in the S&P 500 trade, and it seems like it’s making it harder for people to buy and sell these stocks easily or figure out what they’re really worth, especially when you look at how the gap between what buyers want to…
When money flows into passive funds, it tends to get funneled into the biggest companies just because they are already big, which means their stock prices can keep rising for reasons that have little to do with how well those companies are actually performing, and over time, this can make prices drift away from what…
When index funds use capitalization weighting, they end up buying more of the tech stocks that have already gone up the most, which means they are often buying at the worst possible moment, and this habit quietly chips away at returns over time because it locks in the cost of chasing momentum.
When Nasdaq quickly adds huge new companies like SpaceX to its indexes, even though only a small number of shares are actually available to trade, it sets up a situation where index funds have to buy at whatever price they can get, which almost always means paying more than they should. If you look at…
A macroeconomic history of the 1971 Nixon Shock and the collapse of Bretton Woods, explaining why the shift to Fiat made investing mandatory for survival.
AI Software Engineer at Google | PhD in AI & Engineering | Writing about AI, Engineering, Investing, and Personal Finance.