Become Like the Dragonfly
Top 5 of the Week of December 25
It’s Christmas!! Well, at least it was at the Top of this Week! And here are our favorite five articles for your festive reading pleasure.
Nicolas Rabener searches for the factor “Jack of All Trades” portfolio on his blog, Factor Research. Newfound Research’s Corey Hoffstein gives us the key to making the most of our returns—which is the kind of Xmas present we can get excited about! And writing for Enterprising Investor, Peter Gross explains why we need to find different perspectives on finance, markets, and the economy.
Jesse Felder from The Felder Report helps us get real with our investment portfolios. And Dana Lyons, partner at J. Lyons Fund Management, reveals on his Tumblr page just how many people are in the stock market currently…
A Factor “Jack of All Trades” Portfolio
- While Value is a common factor strategy—bargain-hunting being an appealing aspect of the factor—it can be challenging emotionally to hold these stocks long-term
- Studies show that adding multiple factors in the search for a portfolio that acts as a Jack of All Trades on the stock market actually improves performance and risk metrics
- But this multi-factor portfolio will still change according to other influences like time and region—making it the ‘Master of None’ too…? As the old adage goes
Which factors compile your portfolio? Share your comments in the section below
The Key Is Leverage
- The traditional approach for investor’s asset allocation is to balance between stocks and bonds, and adding in other asset classes can enhance return and reduce risk thanks to diversification
- But modern portfolio theory suggests that we should add another step by introducing cash or leverage to truly optimize performance
- While this idea works in theory, many investors struggle to take the final step and add leverage, which is unfortunate because it can create a much more risk-efficient portfolio
Become Like the Dragonfly
- Adopting a “dragonfly eye” is vital to achieve accurate forecasting on important subjects like finance, markets, and the economy as it helps us to view the bigger picture
- Furthermore, matching this capacity for employing multiple lenses with interdisciplinary curiosity also encourages a more informed understanding too
- For those who wish to achieve this breakthrough in perspective, it’s worth being open to new viewpoints—for which, social media platforms are great places to begin your search
Bad News First
- In the last 100 years on the stock market, stocks and bonds have never been as expensive as they are currently
- Which could mean bad news and the worst returns in history too, if the saying, “the price you pay determines your rate of return” is true
- But given that real assets (e.g., commodities, real estate and collectibles) are at their cheapest ever in relation to financial assets, there is indication that relative returns may more than make up for this possibility
“Most Hated Bull Market of All-Time”
- More and more people are investing in stocks these days, with the number of households holding equity at levels near those of 2000
- While this is not surprising as the stock market is at an all-time high, it’s taken time to get this far since then—investors have been wary due to the financial crises in the meantime
- There is still a way to go before we hit bubble highs similar to the Dotcom bubble, which should caution investors, but this doesn’t mean it’s the “most hated bull market of all-time”
Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form—and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.
Anything you would like to discuss about this week’s top 5? Do you have another favorite that isn’t mentioned here? Feel free to add it below. Let’s start a discussion in the comments section!
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DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article. The Become a Better Investor Team doesn’t necessarily endorse any stocks or shares mentioned in the articles or the author of such articles linked to and summarized in Top 5 of the Week and cannot guarantee the accuracy of its information.