The following chart shows the difference between BRKA and QQQ. It instantly explains why BRKA has for the past 20 years struggled to match let alone beat the broader market. The major drivers of the past two decades have been technology stocks – this is shown by the following table which shows the top 20…
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All traders require an edge and this edge should persist over time, it should not be reliant on special initial conditions or luck. The chart below shows an edge that has failed for the past two decades. This compares Warren Buffet’s performance via his vehicle BRKA versus SPY an S&P500 ETF. As can be seen…
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Hardly a week goes by without me receiving some piece of fluff extolling the virtues of ETFs. Sadly for the average investor or traders the people pumping ETFs have no idea of what ETF actually does whether it is suitable for the investor or what the consequences of getting it wrong are.
Traders go through a series of evolutionary landmarks. These landmarks range from getting stuck in the land of magic indicators and system optimisation to the quest for the perfect exit. Along the way, they often take a detour into the domain of hedging. Part of the attraction of hedging is a misunderstanding of what its…
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Trading is a business that requires us to filter vast reams of information to select stocks that we think give us the potential to be profitable. Unfortunately, most traders go about this decision-making process in reverse, making their jobs that much harder.
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Industries in which capital has become abundant and optimism unbridled often end up disappointing investors. Echoes of these capital cycle pitfalls are also evident in active fund manager selection. In the ‘alpha cycle’ a certain area of the market delivers high returns, stories then emerge not only about the compelling opportunities to be found but…
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While not wanting to diminish the mental anguish that many people, unfortunately, suffer from. It is better to be super wealthy and unhappy than to be poor and unhappy. If I had a dollar for every time I’ve heard the term “first world problems”, my bank account would look similar to those of my clients.…
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All trading systems contain friction and friction extracts a fee from the trader. The more you can do to identify and minimise sources of friction the more profitable a system becomes.
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