So, what do I write about at the Aleph Blog?? I write about a lot of things.? That’s a strength, and a weakness.? A weakness, because not everyone cares about a lot of things and if I shift to cover an area that is unusual, readers may not care.
It’s a strength, in the same sense that most of the best athletes could do well at a wide number of games.? I follow a wide number of themes in the financial markets and economics.? I like to think that I bring more perspective to a wide umber of issues because:
- I have been trained in neoclassical economic theory, and I reject it.
- I have been trained in modern portfolio theory, and I reject it.
- I’ve worked in most areas of the financial markets, and have seen similar events happen in different markets.
- I have quantitative skills, but I have spent a lot of time of economic history.
- Having practiced as an actuary, I have additional skills analyzing liability structures, which are underanalyzed.
My perspective is different.? I don’t expect you to agree with me, because some of my views are “out there,” and I know that when I write it.? I sometimes write things knowing that there is no way that these will be adopted, absent major changes to society.? I write those, knowing that radical change is not impossible, and when change happens, they will need sensible guidelines.
So what have I written about?? From my categories:
I write about economics, stocks and bonds. That’s me.? I want to describe what is going on and how it affects those holding fixed claims (bonds), and variable claims (stocks).
After that, I write about portfolio management and value investing — how do we manage the assets that we own?
The next group is the guts of the market: how does government and Fed policy affect things?? How do insurance, real estate, and derivatives affect our lives?
Beyond those, I write about many things, and I appreciate that you read me.? Your time is valuable; thanks for reading me.
My Performance
My greatest fear when starting up my firm was that after having a great 10-year run with my own assets (and for an employer), that I would go cold when I started managing assets for others.? That is what has happened, with underperformance of 9%+ versus the S&P 500 over the last 16 months.? This is my worst sustained performance over the last 20 years.
I don’t think my methods are poor, nor am I planning on changing.? Every investment method goes through dry times; I have to live through this.
So what will I do?? I will persist in the strategies that have done so well for me? over the last 20 years.? I will continue to do value investing.
I don’t know that it will work, but I think it will.? Value investing is the reliable weak signal amid a lot of investment noise.
And so I act and invest.? My time is coming, and thanks for reading me.
David,
You will do well for your clients.
Best
You fund managers are like triathletes in your portfolio asset allocation.
individual investors have it even worse. Unable to benefit from hedge fund edges we gauge our holdings , rebalance and try not to fall victim to recency bias and chase good performance.
Funds like Yacktman or Artisan Value are all the rage.
Fairholme has fared with fear.
Luck is fickle.
It seems the pricing models for options are always changing. Maybe the plurality are algos that wax and wane between news driven technical patterns and fundamentals like Dr. Andrew Lo hypothesizes, and constant adaptation is required.
Keep writing. As a catharsis, it can be a very positive force.
Thanks for taking the time to make this blog and congrats on post 1800. I’ve been following you since the beginning of the year I think. Your blog and greenbackd are two of the first things I read in the morning.
Value investors are having a hard time at the moment. I take some comfort in that, wherever the price goes, I still have a portfolio of value stocks, and other securities I consider to be better value, and don’t feel a need to anything unusual.
I don’t know if I would feel better as a momentum investor. I would presumably be liquidating now, maybe because of the “death cross”, possibly at a loss and when multiples are not that high.
Best, Al