What investment belief do you hold that the vast majority of your peers (+75%) do not share? In 2019, I decided to start publicly answering the question above and adding to it over time. You can check out the entire thread here: https://lnkd.in/gnGqQsSe My recent podcast with Michael Batnick and Ben Carlson touched on the same topic so at their ‘nudging,’ I’m sharing the entire list below too. Apologies for offending anyone in advance! 1. Investing based on dividend yield alone is a tax-inefficient and nonsensical investment strategy. 2. The Federal Reserve has done a good job. 3. Trend following strategies deserve a meaningful allocation to most portfolios. 4. A basic low cost global market portfolio of ETFs will outperform the vast majority of institutions over time. 5. US investors should be allocating a minimum of 50% of their stock allocation to non-US countries. 6. 13F replication is a better approach to investing in most long-term hedge funds than investing in the hedge funds themselves. 7. As long as you have some of the main ingredients (global stocks, bonds, real assets) your asset allocation doesn’t really matter. What does matter is fees and taxes. 8. A simple quant screen on public stocks will outperform most private equity funds. 9. A reasonable time frame to evaluate a manager or strategy is 10, maybe 20 years. 10. I don’t feel like I have to have an opinion on Telsa stock. 11. A passive index is not the same thing as a market cap index (anymore). 12. Financial advisors and asset managers are 4x leveraged the stock market, and could/should hedge that exposure….or even own no US stocks! 13. Most endowments and pensions would be better off firing their staff and moving to a systematic portfolio of ETFs. 14. Everyone loves to complain about manipulation, THE FED, r/wsb, yadda yadda… Markets are functioning as they always have. Which is, normally. Short squeeze? Yawn, been going on forever. 15. High stock market valuations are not justified by low interest rates. 16. A global diversified portfolio of assets is *less risky* than putting your safe money in short term bonds or bills. 17. The CAPE Ratio is a useful indicator and factor. 18. It doesn’t affect your investment outcome if you own US stocks. You could own 0% and do just fine. 19. A portfolio of sovereign bonds weighted by yield is superior to one weighted by market cap and total debt issuance. 20. Putting all of your money into one asset, like the S&P500, is not “boring”. … to be continued … Am I overestimating how much I disagree with others? What are beliefs you disagree with your peers on? Full blog post with more resources: https://lnkd.in/g6qG6ARm
Andrew Xing
2y
Asset allocation should be fluid and adjusted based market valuations. I like ELMlabs' approach.
Tim Draper
2y
A complex strategy does not mean that it's a good one. Keep it simple. Your strategy shouldn't be difficult to explain.
1. Volatility is not necessarily risk, it is simply a metric that the financial services industry can compute and display. 2. Investors leave return on the table by applying one asset allocation to the entirety of their assets, to the extent that the marginal utility of the next dollar of growth or contributions is different than the existing basket of assets. 3. In the words of Dr. Ashvin Chhabra, risk allocation should precede asset allocation. Goals-based investing matters.
Disagree with only a handful. 2. They are both the arsonist and the fireman 5. The origin of the cash flows more meaningful than the country of the company. 16. Over the long term, sure. But correlations go to 1 when markets crash.
Adrian Buia
2y
Hahaaa! This is awesome!! 👏 the finance world generates such colossal assertions which are no better than simple opinions.
1.That smaller stocks are not inherently more risky for all investors. 2.Volatility and risk are not the same thing. 3.The size premium is not dead. Small junk is dead but so is big junk. 4.Trailing dividend growth rates are pretty much meaningless and useless in forecasts. 5.Some of the most profitable individual stock shorting is when the VIX is low and markets are slowly rising. 6.Without dividends anchoring stocks in reality, there would be no transfer of cashflows to investors and all other valuation techniques would become fanciful mind experiments. 7.Momentum investing is challenging and carries hidden risks. High momentum stocks after a crash would be utility companies. That's not a good holding for the rebound.
Richard Hoe
2y
Meb, you are always timely and on point. Many people who mostly own Berkshire Hathaway stock would agree wirh your one-asset theory.
CIO at Draco Ova Holdings (SFO)
2ySample covariance matrices have diminutive eigenvalues without shrinkage.