Investment strategies and portfolios are tailored plans designed to meet financial goals through the careful selection and management of assets. The cornerstone of a successful investment portfolio is diversification, spreading investments across various asset classes like stocks, bonds, and real estate to mitigate risk. Asset allocation is another key strategy, determining the mix of assets based on an investor’s risk tolerance, goals, and investment horizon. Investors often choose between active investing, which seeks to outperform the market through strategic buying and selling, and passive investing, which aims for long-term growth by tracking market indices with lower transaction costs. Regular portfolio rebalancing ensures the investment mix remains aligned with the investor’s objectives, adjusting for market fluctuations and life changes. Tax-efficient investing strategies can also enhance returns by minimizing tax liabilities. Ultimately, a well-considered investment strategy and portfolio management approach can help individuals navigate market complexities and achieve financial growth over time.
Let’s look at a century of US stock returns*. Most investors know the long-term story of the US stock market. Stocks go up over time. But that simple sentence hides a lot of pain, patience, luck, and uncertainty. Looking at…
Meb Faber has several times stated that he is a trend follower at heart. In 2015, he published an article about a momentum and trend-following strategy called Meb Faber’s Three-Way Model in gold, stocks, and bonds. The model came from…
A trend following strategy for the S&P 500 is one of those ideas that seems almost too simple to work: be invested when the market is rising, and step aside when it starts falling. Despite this simplicity, the approach has…
What happens to stocks when bonds go up? Any stock investor or trader should have a basic understanding of the relationship between stocks and interest rates. Why? Because the interest rates influence investors’ risk appetite. When interest rates are high,…
When a stock is overbought, we can expect weaker returns than average over the next few days. But in the long term, returns gravitate toward the average returns. Thus, overbought stock markets only predict short-term results – not long-term. This…
When bonds go down and interest rates go up stocks perform poorly. A lower price for the bond means that the yield and interest rates go up, and future cash flows get discounted at a higher rate. When rates go…
Investing in the S&P 500 for the long term has historically been a surprisingly safe bet. Studies show that over any 10-year period, the chance of losing money is just around 6%—meaning there’s a 94% probability of ending with a…
Determining the right mix of assets to help you reach your short-term and long-term financial goals is the key to building a winning investment portfolio. For many years, financial advisors and experts recommend the 60/40 portfolio because of its simplicity…
Few concepts are as enduring as momentum and trend following. A recent research paper titled “A Century of Profitable Industry Trends”, authored by Carlo Zarattini and Gary Antonacci, explores a systematic approach to capturing these trends over a 100-year horizon….
This blog post explores fascinating new evidence from a research paper titled “From Red to Blue: The Long-Run Inversion of Political Cycles and Stock Market Returns Over 153 Years” by Han, Lu, Xu, and Zhou. The paper documents a fundamental…
A compelling approach to tactical asset allocation is the global equities momentum strategy, originally called “Enhanced” Global Growth Cycle (GGC) strategy, developed by Grzegorz Link, and referred to by Allocate Smartly. This strategy builds on the original GGC by combining…
Every market cycle eventually reminds investors of the same uncomfortable truth: stocks do not always go up. When drawdowns occur, the natural question becomes which assets actually protect capital when equities fall. Defensive assets are supposed to do exactly that….
The “Lazy Man’s Momentum Strategy” stands out for its simplicity. The rules are straightforward: every six months, the strategy looks at 22 country indices and buys the 11 with the highest 6-month return. This is a strategy we first identified…
You are going to learn about the 22 best investment strategies in this article. Learning different investment strategies is important for achieving financial success. Investors, who vary in their risk tolerance from conservative to aggressive, are on the lookout for…
https://www.youtube.com/watch?v=NdnJX4kjPQM Imagine a trading strategy so simple it takes just five minutes a year to manage, yet it has outperformed the Nasdaq for over a decade. That’s exactly what @thechartist showed on X. This strategy, pairing two ETFs with a…
A recent quantitative study examined the feasibility of generating abnormal returns (alpha) in the highly specialized commodity futures market by utilizing common technical indicators: the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI). This research investigated whether…
Forget gold and options: This Factor-Based Strategy Is the Ultimate Crisis-Proof Investment (plus trend/following). A common investment strategy involves balancing risk and return with a traditional portfolio split: 60% stocks (equities) and 40% bonds (the 60/40 portfolio). While this portfolio…
In the world of finance, professional financial analysts play an important role, directing the allocation of capital through in-depth research. When analyzing a company, analysts typically conclude their reports with a recommendation, usually categorized as strong buy, buy, hold, sell,…
In the long term, gold has proved itself as an inflation hedge, but not in the short term. Gold is often viewed as the world’s oldest financial asset, possessing a reputation as a crucial safe-haven asset, particularly during times of…
The systematic global macro investment style, labeled Macro Momentum, is grounded in economic theory and aims to capitalize on the tendency of market participants to underreact to news by positioning on the basis of fundamental macroeconomic trends. In general, such…
Is gold truly the inflation-proof sanctuary many believe it to be? While its allure as a safeguard against rising prices has long been celebrated, particularly after the turbulent 1970s, recent comprehensive analysis reveals a far more nuanced reality. Far from…
Hendrik Bessembinder, an academic, published a study in 2017 that went on to become widely spread and known. His hypothesis was pretty straightforward: do stocks outperform Treasury Bills? No, most stocks fail to beat one-month Treasury Bills during their lifetime…
Can a single trading rule really beat the market? It sounds too simple to be true, but our backtests suggest otherwise. In this article, we explore whether one straightforward rule can outperform buy-and-hold investing, both in stocks and in crypto….
The traditional 60/40 portfolio, 60% stocks and 40% bonds, has been the cornerstone of investment advice for decades. But what if we flipped conventional wisdom on its head? Thomas Carlson’s “Defense First” strategy, as analyzed by Allocate Smartly, presents a…
Do you sometimes wonder what are the historical returns for stocks, bonds, gold, real estate, and cash? Which asset class has performed the best over the last century? We are wondering, and we thus decided to compile all the data…
Investors love certainty, but markets rarely offer it. Still, some frameworks help us think more clearly about what drives returns—especially over the long term. One of the most intuitive was developed by none other than John Bogle, the founder of…
Jack Bogle’s famous advice was to avoid searching for individual stocks, sectors, or markets that may perform better and simply invest in the entire market. This means using index funds to build a diversified portfolio. The Bogleheads 3 Fund Portfolio…
Investing in individual stocks can be exciting and risky. One of the biggest concerns for investors is the possibility that a single stock could significantly drag down their entire portfolio. But how likely is that to happen? And what can…
Imagine investing your hard-earned money in the stock market, waiting a full decade, and seeing little to no growth, or even a loss. That’s the dreaded “lost decade” for the S&P 500, a period where the market barely budges, leaving…
Dividend stocks have long been a favored choice for investors seeking steady income and potential stability, particularly within the S&P 500, a benchmark index of 500 leading U.S. companies. With approximately 80% of S&P 500 companies paying dividends as of…
The S&P 500 tracks 500 leading U.S. companies, making it a reliable gauge of market health. Whether you’re a day trader, long-term investor, or just curious about market behavior, understanding the likelihood of a positive day can shape your strategy….
Want to outsmart the stock market? An insider portfolio, built on the trades of company executives and directors, might give you an edge. Can an insider portfolio beat the market? Research says it’s possible, with potential returns of 11% to…
The S&P 500, a benchmark index tracking about 500 large U.S. companies, serves as a proxy for the broader stock market’s performance. Yet, data from 1928 to today shows it underperforms cash—represented by 3-month Treasury bills—roughly 19.59% of the time…
The term “10x stock” is often thrown around in investing circles. It refers to a stock that multiplies your initial investment by ten over a set period, usually 10 years. But how common are these elusive investments? Is there a…
As U.S. presidential elections approach, investors often wonder how the stock market, particularly the S&P 500, will perform. Election years bring political uncertainty, campaign promises, and economic shifts, all of which can influence market trends. So, what are the odds…
Market timing is often described as a futile exercise. Yet, seasoned investors know that certain seasonal patterns can influence returns. This article concludes that October is the best month to buy stocks. One of the most persistent patterns in the…
Timing the stock market is a dream for many investors, but is it possible? By analyzing historical data, we looked at quarterly performance patterns in the SPY (SPDR S&P 500 ETF Trust) that suggest some quarters may offer better opportunities…
The S&P 500 is a cornerstone of the U.S. stock market, tracking 500 of the nation’s largest companies. For investors, it’s a key indicator of economic health—but it’s not without its wild swings. A common question arises: how often does…
Midterm elections, occurring every four years halfway through a U.S. president’s term, are events that can reshape Congress and influence legislative agendas. Given their potential impact on economic policy, it’s natural for investors to wonder how these elections affect the…
The question of whether a monkey picking stocks could outperform a hedge fund manager is a fascinating thought experiment often used to highlight the challenges of beating the market. It seems likely that, on average, random stock selection could indeed…
When the stock market crashes, it feels like the world is ending. Your portfolio’s in tatters, the news is a wall of gloom, and all you can think is: How long will it take to get back to normal? How…
This article note provides a comprehensive examination of whether a coin toss can beat Wall Street’s top investors, drawing on a range of studies, experiments, and financial theories. Background and Context The question of whether random strategies, such as a…
Mondays often feel like a drag. After a relaxing weekend, traders might dread the market open, blaming bad trades on the “Monday blues.” But is this just a feeling, or do the markets actually underperform on Mondays? To find out,…
Could the S&P 500 be in a bear market without you noticing? It’s a question that might make any investor pause. In this article, we’ll explore the probability of a stealth bear market using the 200-day moving average as our…
When the stock market closes on Friday, many traders and investors assume their portfolios are on hold until Monday. But are weekends secretly impacting your returns? New data reveals how the S&P 500, long-term Treasury bonds, and Bitcoin perform over…
The S&P 500 is often hailed as the gold standard for gauging stock market success, but how well does it protect your wealth against the relentless creep of inflation? Spoiler alert: It’s a strong contender, beating inflation about 75% of…
The S&P 500 can feel like a wild ride, especially during a “bad year” with negative returns. Whether it’s a steep 38% drop like in 2008 or a milder 6% dip in 2018, these downturns raise a big question: how…
Have you ever wondered if your money could double in a decade just by investing in the stock market? It’s a question that sparks curiosity for anyone looking to grow their savings – whether it’s for a dream home, retirement,…
Imagine a year where the stock market, often a rollercoaster of gut-wrenching volatility, decides to take a breather—finishing almost exactly where it started. No dramatic gains, no catastrophic losses, just a quiet, steady hum. How often does the S&P 500,…
When the stock market takes a nosedive, panic sets in fast. Portfolios bleed red, headlines scream doom, and every investor wants to know: How long will this last? How long does it take for stocks to hit bottom—that critical point…
Ray Dalio’s All Weather Portfolio is a pretty well-known portfolio, and for good reasons, in our opinion. Ray Dalio and his team at Bridgewater Associates constructed the All Weather Portfolio to withstand every economic environment (and shocks) possible. What exactly…
David Swensen was the President and Chief Investment Officer of Yale University endowment from the mid-1980s until his death in May 2021. Swensen, along with Dean Takahashi, invented The Yale Model. Let’s take a look at the David Swensen Portfolio…
When stock markets are overbought, we can expect weaker returns than average over the next few days. But in the long term, returns gravitate toward the average returns. Thus, overbought stock markets only predict short-term results – not long-term. This…
Inflation is one of the most popular and important economic indicators. It is monitored by everyone — businesses, financial regulators, and investors. Not only does it guide regulators in their policies, but also, it affects businesses, which in turn, influences…
Investment style diversification in trading helps manage risk and maximize returns. By combining growth, value, and income investing, you can build a well-rounded portfolio. This article will explain these styles and show how integrating them can bolster your trading strategy….
Today we will introduce you to two main approaches to investing – passive vs. active investing strategy. An investor with a passive strategy will devote less time to the market and can increase capital at a pace in line with…
Some weeks ago I published an article looking at the worst month in the stock market: September. Today, 29th of September, as September is coming to an end, and we’re about to enter the best season being invested in stocks:…
In recent times, most investors prefer to invest using passive investment strategies with lazy portfolio management. Passive investing has “exploded” since the financial crisis in 2008/09, and part of this is due to the enormous growth of ETFs. Passive investing…
Let’s say you are a wealthy person who has already achieved FIRE (financial independence – retire early) and wants to preserve your wealth. It doesn’t matter what strategy or portfolio you used to achieve wealth because it requires completely different…
Would you like to know what the worst-performing group of stocks is? One certain type of stock has not made any money since JFK was president. That is 60 years. Yes, you read it right. 60 years! Any long-term mindset…
What is the relationship between the unemployment rate and stock market returns? This is a somewhat confusing and not-so-straightforward relationship. Thus, in this article, we try to investigate the unemployment rate and subsequent stock market returns. Is the unemployment rate…
What happens to stocks when interest rates go up? Our backtest reveals that when rates go up, stocks don’t perform well, just as the financial theory says they would. The cornerstone of the financial theory says that the higher the…
An investment checklist is handy, no matter your time horizon or investment style. The bare minimum is a mental checklist, but preferably it should be written. Like the aviation industry developed checklists to avoid disasters, investing is about error removals….
The Bernstein Coward’s Portfolio by Bill Bernstein aims to diversify investments as widely as possible across asset classes (bonds & stocks), countries, company size, and valuation. Bill Bernstein Coward’s Portfolio strategy can be implemented with only 9 ETFs, of which…
The relationship between interest rates and stocks is crucial to understand if you are investing in the stock or bond market. How does the S&P 500 perform when interest rates are rising? Interest rates and the stock market have an…
The Gibson Talmud Portfolio by Roger Gibson aims to diversify investments across US stocks, REITs and bonds. The Gibson Talmud Portfolio strategy can be implemented with only 3 ETFs, of which 33.34% are US stocks, 33.33% are US REITs and…
The majority of investors think long-term. For instance, most US households, excluding the wealthiest 1%, predominantly keep their stocks, bonds, and bills in retirement portfolios. In fact, those not in the top 1% or even 10% of wealth distribution have…
Yesterday, the 3rd of September 2020, witnessed a pretty big drop in the stock market with Nasdaq leading the decline with a drop of 5.07%. Out of interest, I looked at the performance of September going back to 1970, using…
What is the Holy Grail of investing? The Holy Grail is often used to describe a method to achieve eternal success or happiness, depending on your goal. The Holy Grail is the lure of high and consistent returns in investing….
Bitcoin has appreciated a lot over the last years, and polarized discussions on social media continue endlessly about which asset will perform the best in the future. Many swear to Bitcoin and cryptos, while others swear to the more traditional…
SPY is the ETF for S&P 500 and GLD is the ETF for the gold price. Michael A. Gayed, CFA, presented a SPY/GLD rotation strategy on ritholtz.com in July 2011. SPY is the ETF for S&P 500 and GLD is…
It’s important to avoid trading mistakes to increase profits. “The good is mostly in the absence of the bad”, as it is nicely summarized in Nassim Nicholas Taleb’s Antifragile. Put short, if you avoid the gravest mistakes, winning tends to…
The Clyatt Sandwich Portfolio made by Bob Clyatt aims to diversify investments across stocks, REITs, bonds, and cash. The Clyatt Sandwich Portfolio strategy can be implemented with 9 ETFs. You do not need to pick individual stocks and bonds. According…
What is the optimal asset diversification historically? This is debated, but we came across an interesting study that looks at the best historical asset class diversification models over the last 100 years, all based on statistics and backtests. The main…
Today we will look at Meb Faber’s Global Asset Allocation portfolio from his book of the same name. The Global Asset Allocation portfolio is a passive investment strategy that aims to provide investors with a diversified exposure to global asset…
Albert Einstein is famous for saying that compounding is the eighth wonder. But is he correct? Yes, to a certain extent, he is correct. Look at the example below: Disclaimer Quantified Strategies (SIA Lofjord) is not an investment advisor. The…
Mebane T. Faber, along with Eric W. Richardson, is a co-founder of Cambria Investment Management and serves as the company’s Chief Investment Officer. In 2009, they released a book called “Ivy Portfolio,” which outlines their investment strategy. Let’s take a…
Is it possible to get rich by investing in stocks? If so, how do you get rich investing in stocks? It’s possible, of course, to get rich from stocks, given certain assumptions. However, being patient is mainly how to get…
Factor investing targets securities with specific characteristics, called factors, that have historically been associated with higher expected returns. Common factors include value, quality, momentum, size, and minimum volatility. Factor investing is a strategy that uses various attributes of securities, such…
After a positive year for stocks, S&P 500 tend to rise 6.75% the next year, not including dividends. If the S&P 500 drops one year, the next year return is on average 12.1%. After a good year in the stock…
The Simple Path to Wealth Portfolio by JL Collins is a “lazy” index diversified portfolio that allocates assets across two asset classes: stocks and bonds. These two asset classes are divided into two categories: U.S. stocks and U.S. bonds. Thus,…
The lower the interest rates, the more attractive it is to own risky assets like stocks, gold, and Bitcoin. This relationship is at the cornerstone of the financial theory. In this article, we do a backtest to look at the…
There are many ways investors try to determine if the stock market is overvalued or not. Some people rely on technical indicators to gauge whether the market is overextended or overbought, while others employ valuation measures like the P/E ratio,…
Many investors are obsessed with identifying future multibaggers. How can you find multibagger stocks? Unfortunately, it’s not easy. In this article, we look at a specific research report that addresses how to find multibaggers. The main takeaways from the report…
Buy and hold has worked very well for long-term investors. History has also taught us that active money managers have underperformed S&P 500 or their benchmarks. We dream of becoming Warren Buffett, but most of us are below-average investors. Thus,…
Stock picking is difficult because only a small minority of the stocks contribute to the majority of the gains. It’s skewed to only a few outliers. It’s as simple as that. Let’s look at some facts: Most stocks don’t beat…
The Merriman Ultimate Buy And Hold Portfolio by Paul Merriman aims to diversify investments as widely as possible across asset classes (bonds & stocks), countries, company size, and valuation. The goal is to have aa portfolio that achieves good risk-adjusted…
Imagine what it would be like to have invested $100 in the stock market in 1928 and held on to it until today. What’s the growth of $100 invested in 1928? $100 invested in the stock market in 1928 would be…
The Coffeehouse Portfolio from Bill Schultheis aims to diversify investments across stocks, REITs, and bonds. The Schultheis Coffeehouse Portfolio strategy can be implemented with 9 ETFs. You do not need to pick individual stocks and bonds. Accordingly to our backtests…
Throughout history, gold has consistently held its position as the preferred global currency. Now, investors primarily acquire gold as a safeguard against economic instability and, of course, inflation. How does gold perform when inflation is high? Gold has famously been considered…
Harry Browne was an American investment advisor and financial writer. He was best known for his investment philosophy and strategies, which he outlined in several books. In his book “Fail-Safe Investing,” Harry Browne introduced the Permanent Portfolio as a way…
How does war affect the stock market? Can we expect poor returns and increased volatility? Or is it a good time to buy when you hear the sound of cannons? Perhaps counterintuitive, history suggests that stock markets show less volatility…
The Second Grader’s Starter Portfolio by Paul Farrell is a passive index portfolio that aims to diversify investments across stocks and bonds. The Second Grader’s Starter Portfolio strategy can be implemented with only 3 ETFs. You do not need to…
Commodities are difficult to trade profitably, with few strategies offering any statistical edge. Despite this, finding effective commodities strategies might be worth the effort, as they allow for profits that are uncorrelated with those of other strategies and tend to…
A recent study about Norwegian traders and investors sheds some light on the returns (or lack of) based on diversification, age, wealth, and risk appetite. The study is called What Do the Portfolios of Individual Investors Reveal About the Cross-Section…
I signed my first client and proceeded to short my first stock. It almost proved to be my last. Over the next few weeks, I watched the stock trade up to 20, then 30, then 40, finally breaking through 50…..But…
Many investors prefer to invest using passive investment strategies and “lazy” (but smart?) portfolio management. Increased knowledge, lower costs, and a rise in fund offerings (both ETFs and mutual funds) have contributed to this. Passive strategies include a popular asset…
Peter Lynch is a famous but retired money manager. Lynch managed the Magellan Fund of Fidelity from 1977 to 1990 with outstanding returns: more than double the S&P 500’s return. Lynch made 29.2% annual returns for his investors and retired…
Asset allocation is the allocation of investments across different classes of assets. In a broad sense, this means a combination of stocks, bonds, various securities and money market instruments. Within these classes, subclasses are also distinguished: Risk and return The…
