Iceberg & Arugula

Adam Smith once said “Show me a portfolio, I’ll tell you the generation.” It’s safe to say if he peeked inside a brokerage account today, he wouldn’t recognize which generation he was in. The story we keep hearing about is the shift from active to passive, and while it’s true that dollars are leaving stock…

Can You Predict Bubbles?

“For bubbles, I want a systematic way of identifying them. It’s a simple proposition. You have to be able to predict that there is some end to it. All the tests people have done trying to do that don’t work. Statistically, people have not come up with ways of identifying bubbles.” – Eugene F. Fama,…

Two Point Seven Five & Twenty-Seven

A few legendary hedge fund investors have been able to overcome the burden placed on them by the nature of their fee structure. Paul Tudor Jones is one of these managers. According to a recent Wall Street Journal article, his flagship fund has had average annual returns of 17% over the last three decades, after…

A Little Can Go A Long Way

When thinking about their financial situation, most people spend way more time thinking about investing than they do about spending and saving. If I had to guess, I’d say the breakdown looks like something the chart below.   It should be the exact opposite, because saving and spending is something we have complete control over….

Handcuff Volunteers

A few weeks after the election, a friend of mine told me he sold all of his stocks in his 401(k). He was happy with the 13% his portfolio earned in 2016 and felt that stocks had gone too far too fast. He understands that he can’t time the market, but he just couldn’t help…

How To Survive A Bear Market

Not everybody can sit through a bear market. Sure, guys like Buffett and Munger never sell, but for the 99% of us who have emotions, we need to do something to de-risk when it looks like the world is falling apart. But what so many investors get wrong is that they don’t have a process…

The Bear Market That Nobody Talks About

It’s generally accepted that the current bull market began in March of 2009, which means that stocks have been running for 2002 trading days. I’m not on board with this line of thinking. Forget the first point, that the bull started at the lows in 2009, as opposed to 2013 when the 2007 highs were taken…

Should Stocks Be Worth More Now Than They Used To Be?

“Strange things happened near the boundaries”- James Gleick Stocks are not cheap. The CAPE ratio is 28.46, above the long-term average of 16.73 and more expensive than 96% of all readings. But exactly how expensive are they, and what might this mean for future returns? The chart below from Star Capital shows that the more…

Getting Lucky & The Stock That Changed My Life

“Chance can be thought of as the cards you are dealt in life. Choice is how you play them.”- Ed Thorp This past week I was on a panel with Abby Joseph Cohen and Liz Ann Sonders. How the hell did that happen? I want to share with you some pieces of my story and…

Firearms Versus Bow and Arrows

“Every stock market system with an edge is necessarily limited in the amount of money it can use and still produce extra returns.” – Ed Thorp In the decade after Ed thorp launched Princeton Newport Partners, the fund gained 409%, annualizing at 17.7% before fees and 14.1% after. Not bad for a market neutral portfolio….