Winning systematically with Fortune’s formula

When timing is everything When Ed Thorp, the famous billionaire money manager, wanted to test his gambling theory of how to beat the dealer, he started out by card counting at the casinos. In those days casinos only used a 52-card deck, and when the deck was exhausted the house shuffled and started again. ThisContinue reading “Winning systematically with Fortune’s formula”

Value investing for income (NOT speculating)

Investing for income Many global stock markets have moved into the rampant speculation phase of the cycle, whereby nearly all of the focus and talk is about speculating for capital growth. It will end nastily, as it always does. But how does one invest for income in the meantime, while patiently waiting for sanity toContinue reading “Value investing for income (NOT speculating)”

Separating the signal from the noise (speculating versus investing)

Signal versus noise We’re usually reticent to provide running stock market commentary – it’s a fool’s errand, and mostly it’s just noise anyway. However, we do believe investors should be wary of the current market signal. Ben Graham famously outlined the difference between investing and speculating thus: Graham didn’t rule out speculating altogether, provided thereContinue reading “Separating the signal from the noise (speculating versus investing)”

Criticism of ‘Low Rates, High Returns’

Many ways to invest It’s important to reiterate that there’s no ‘right’ way to invest, only the right way for you, your present situation, goals, and personality type. In our book we outline what we believe to be the optimal approach in the current environment, but there are always other ways to invest. The mostContinue reading “Criticism of ‘Low Rates, High Returns’”

This is how you can invest for value (without losing money)

Investing for value Plenty of people like to think of themselves as ‘value investors’, but when push comes to shove they’re often circling the same few stocks as everyone else, partly due to their home bias. Value investing is about buying a dollar for fifty cents (or as cheap a price as possible). Today, aContinue reading “This is how you can invest for value (without losing money)”

Understanding yourself, cycles, and your risk tolerance

Understanding yourself and risk Understanding yourself is critical in developing an investment strategy and sticking to it when the pressure is on. Interestingly, this ties into our notions of risk. The first question a financial advisor often asks is: ‘What is your risk level?’. The first problem is that most of us have no idea!Continue reading “Understanding yourself, cycles, and your risk tolerance”

Total money management: 3 Wells of wealth for genuine financial independence

What is financial independence? Today, a short discussion on how you can invest for true financial independence. Ideally, we like to think of personal wealth in 3 Wells, as follows: Well 1 – Liquid funds (<12 months) These liquid funds can be actively managed, and while not a significant percentage of your overall wealth, shouldContinue reading “Total money management: 3 Wells of wealth for genuine financial independence”

Maximising your long-term wealth with the Kelly Criterion

The Kelly Criterion Because global markets rise and fall in cycles, periodically crashing to irrational lows, this throws up wonderful opportunities which allow you to generate significant wealth. You don’t need to be fully invested at all times, whatever the finance industry might try to tell you (or sell you!). Instead you can think ofContinue reading “Maximising your long-term wealth with the Kelly Criterion”

Capital Growth Theory: how to maximise your long-term wealth

Position sizing If you’ve ever played blackjack at the casino you’d be familiar with the concept of bet sizing. You don’t bet the same amount regardless of your hand; instead you aim to place larger bets on high probability events. Here’s a very simple formula where ‘p’ is the probability of winning, expressed as aContinue reading “Capital Growth Theory: how to maximise your long-term wealth”

The benefits of effective asset allocation

Asset allocation If you see your financial advisor they’ll likely recommend that you allocate your assets between property, stocks, and cash (partly due to the tax incentives for real estate and equities in Australia). That’s because all asset classes have summer and winter seasons. Source: Novel Investor Sensible asset allocation can help you to adoptContinue reading “The benefits of effective asset allocation”