Your diversifiers are there to diversify your equity.
A simple way we like to think of putting your diversifiers together:
๐ดTail Risk strategies: Fast crashes
๐กTrend Follow: Slow Moves
๐ขCash: Stability
My presidential platform:
1.) Eliminate Daylight Savings time
2.) Execute owners of robocall companies
3.) Ban commercials louder than the show you're watching.
This will save billions of dollars and thousands of lives.
Ground beef is the best taco meat. And yet..."high end" mexican restaurants rarely have it as an option.
If I'm elected president, I will change this injustice.
I heard the most evil, grotesque, hedge fund investors who LITERALLY get their seed capital by stealing from salvation army buckets at Christmas are 2000% short concentrated value ETFs right now.
If we all buy an ETF that sounds like that right now, we can take down wall St!!!!
The year is 2030.
Small caps have outperformed large caps for the last ten years.
โLarge companies just donโt have the room to grow like small companies. Plus, small stocks can always adapt faster. After all those antitrust issues, itโs a new economy now.โ
Saw the movie Interstellar last night. Great movie that bends your mind.
If I was a grade school science teacher Iโd be wheeling this bad boy in and showing it:
@danielcrosby
As someone who has rented a house on Airbnb, hereโs the problem:
You need to clean the house. Whether you do it yourself or pay someone, itโs a lot of work bc itโs a DEEP clean. Picking up hairs off the floor, shower, etc. DEEP.
Someone rents for one nightโฆnot worth it.
Hearing people say, "I'm going to wait until things clear up on the coronavirus before I buy"
But that's the whole catch with investing: if you wait until you 100% know, prices now reflect that. Won't be "on sale" anymore.
True for single stocks as it for market at large.
Thereโs a first time for everything. This is the first time we got a booth at conference.
Moved out of garageโ
Conference boothโ
Weโre pretty much iShares at this point. A truly global presence.
Its either going to be the most epic collapse the world has ever seen (madoff eat your heart out), or theres a future world that is well beyond my comprehension.
Im open to either. But gonna just sit and watch the show.
Thinking of going private at 5000 followers.
5000 internet friends seems like the right amount.
Small town feel, but we can still fuck shit up if we have to. Perfect.
๐จANNOUNCEMENT๐จ
We are extremely excited to announce
@lady__bost
is joining our team to be VP - Brand Partnerships.
She'll be working with our existing and future financial advisor clients to continue our mission of empowering investors through education.
Welcome aboard Jess!
Annual reminder: Avoid trading ETFs within the first 15 minutes of the day. All ETFs are derivative securities. That is, they derive their price from something else.
Waiting a little bit enables the firms that make the prices in ETFs ("market makers") confidence to price better
The bad news: I will no longer be attending this event tonight (but you should!).
The good news: itโs bc my wife and I had our first child yesterday.
If lifeโs about trade offs, this is one Iโll take!
Good event for people local to Philadelphia (or those who really really like to travel):
@WomeninETFs
Philadelphia chapter is hosting an event on April 21 at the Constitution Center: THE FALL (AND RISE) OF ACTIVE
@EricBalchunas
will be interviewed by
@LaurenMcDavis
Ive personally met retired people who had their lives ruined in a blink using leverage. Out looking for work in their 80's. Smart person. PhD.
Used leverage.
"I thought I knew what i was doing. My wife forgave me though."
Seeing lotta leverage chatter. Be careful!
I spoke to BlackRock's co-head of systematic active equity, who says quants should move on from value. Stock valuations are essentially unknowable and rather than scale a data set by price, just see if it predicts returns
Wednesday night: Russia begins attacks on Ukraine
Thursday: stock market up
Friday: stock market up
No one wouldโve guessed that sitting there on Wednesday night.
Predictions are worthless. Buy good assets and hold on.
There are now two individuals in the Gray family more famous than Wes. Wes's brother,
@CliffGry
, and Grizz.
Cliff Gray on the
@joerogan
show.
Cc:
@alphaarchitect
Sell off reminders:
1.) There has been an average of 1.7 5% sell-offs per year. Normal!
2.) Those 5% sell-offs often become 10% sell-offs at 47% of the time. But only 21% of the time do they hit a 20% sell-off.
Quant algo says to sell AMZN and buy MSFT.
We bought AMZN at $1 and its now worth $10.
We give AMZN to an Authorized Participant (AP). They give us back MSFT.
This is called an in-kind transaction. No capital gains.
The best case scenario for ESG: You breakeven.
Worst case for ESG: You lag.
You can't *add* constraints and expect to outperform. It's arithmetic.
Pension funds, that are underfunded, putting other people's retirement money in that scenario?
For a long while, ARKK and our US momentum strategy was tightly correlated.
As our US momentum strategy got out of many of the high flying growth names, and rotated into value names, they no longer move similarly.
2020 will be a great year for Alpha Architect. Big things in store for clients and friends.
1) Revamped and better than ever Democratize Quant Conference. Education!
2) Financial Analysis tools (we'll be showing them more in the coming months). Transparency!
3) Value decade? ๐
Value up. Momentum down. Today is a good (very short term) example of why they make a good pair.
If the F.O.M.O. party stops, you can expect momentum to struggle and value to do well.
Momentum is your F.O.M.O. protection.
There will be a Philly FinTwit Happy Hour next Wed 4/7 at 5pm at the beer garden across the street from the liberty bell. I'm organizing it w/
@RyanPKirlin
. All welcome. Here's link to venue:
Portfolio management 101 (and 201, 301, and 401).
What are the two keys?
1) own things that have a positive expected return. this is why we donโt own cars as part of a portfolio (collectibles notwithstanding).
2) own differentiated return streams.
Merry Christmas!
The secret to Christmas morning at any age is being the first one up. You're in the driver's seat for the emotional tone. You're the captain.
YOU get to scream in other people's faces while they're still half asleep, singing chipperly, and get prime seating.
Made it mile 60 in the Leadville 100 by missing the time cutoff. Who knew running 100 miles was that hard? I can still soundly say it was epic though.
Thank you to everyone who supported.
@rodsmartbe
and his wife Nicole were total legends in helping pace.
To recap the week:
1) Monday: Open 7% down. Immediately paused for 15 mins. ("Breathe People!")
2.) Thursday: Limit down pause again at the open. 7%. Threatened to hit a 13% pause down. Closed 10% down. Biggest 1 day drop since 1987.
3) Friday: market up 10%. Yeehaw!
In September 2021:
Facebook ($META) had a market cap of $1.078 Trillion.
Exxon ($XOM) had a market cap of $228 billion.
If I told you a little over a year later, Exxon would be larger than Facebook you would...?
Alpha Architect is in the fight.
Weโre not trying to be a $100 BN firm. Weโre trying to be the purest value and momentum offerings. That doesnโt scale.
For some, thatโs a satellite position
For a few, thatโs a core holding
However you use us, weโre grateful to all our clients.
"Cardiorespiratory fitness is inversely associated with long-term mortality with no observed upper limit of benefit. Extremely high aerobic fitness was associated with the greatest survival."
Get your cardio in gang.
In our portfolio architect tool, you can compare the universe of ETFs against each other in a transparent way on characteristics (characteristics are destiny ๐งโโ๏ธ).
Hereโs the universe of ETFs supported by two of our favorite metrics (value and momentum) and ARKK highlighted.
"the average annual return across all factors is a mere 0.9% in bull markets, versus a solid 8.6% in bear markets. In other words, factors appear to generate most of their return in bear markets, while barely delivering in bull markets. Since bear markets comprise only 21% of theโฆ
Things you learn about investing through experience:
1.) Concentration gets you rich. Concentration gets you poor. How you allocate that is what matters for wealth.
2.) Volatility takes on a different meaning each dollar you add to your wealth + each unit of time.
3.) ??
Here's a simple model Vanguard sends out:
VOO: 25%
VEA: 25%
VWO: 25%
VXF: 25%
This is a good model.
What makes a good model?
Low fees, tax efficient, and appropriate exposure.
Diversified models won't get you rich, they keep you rich.
@danielcrosby
Yea- would be better if Airbnb simply listed all properties as your total cost based on time stayed. I think everyone (renters and owners) would be for that.
Seems like a simple fix.
In the past few weeks, Alpha Architect has managed to close the gap between us and the oligarchs of the ETF industry faster than ever.
Theyve lost hundreds of billions in AUM. Weโve lost millions.
Weโve got em right where we want โem gang!
NFT people tell me this was a "flashloan." Meaning, this individual took out a loan to fake someone buying it, bought from himself, then immediately payed the loan.
Who the hell gives out a $532 million loan to an individual? Even for an instant?
If Alpha Architect ever gets a single daily inflow of over $1 Billion, I promise to buy all of my current followers a pony in the color of their choice.
@MebFaber
Any idea how much money is in long bonds vs stocks?
I know thereโs some stat like โthe bond market is 10x the size of the stock market.โ
So you want to invest in value stocks? Welcome.
Here's a great explanation from
@CliffordAsness
on what you have to consider. There's a lot of ways to "invest in value stocks."
Men able to do more than 40 push-ups had a 96% reduced risk of CVD events compared with those able to do less than 10 push-ups. Push-up capacity had a stronger inverse association than aerobic fitness estimated by a submaximal treadmill test. ๐
@Stefokali
Facebook moving into cheap territory on EBIT/TEV.
Now in the top 16%. Little lower could have it entering the range it could make it past our screens (~top 10% on cheapness).
That circle it's overlapping with? Exxon baby. ๐ข๏ธ$XOM๐ข๏ธ
๐จBlack Friday sale from Alpha Architect๐จ
Our US quantitative value strategy is currently being sold at a ~45% discount to the market.
This deal will ONLY last until...well... probably as long as we are running this strategy. Irregardless...
๐จ Ya gotta get in NOW!!!!!๐จ
New hobbies after this for Alpha Architect will be golf.
The "Quant Golf Enough," Golf outing has a nice ring to it.
Press like to show Wes that people *also* like golf instead of running 100 miles or marching 28 miles with a 35 pound pack.
#getsoft
#livesofter
I'm slacking on my tracking of the ETF League Tables, so not sure if its been mentioned but...
Congratulations to
@MebFaber
@CambriaFunds
on cracking $1 billion in AUM in their ETF Biz.
What a ride!
1| Here's an article stating the BlackRock's MTUM is losing assets because momentum is lagging. But what if MTUM isn't actually a momentum fund?
What if its mega-cap fund and its performance is driven by the mega-cap companies? Bamboozled!
Well. Great news! Today is my first day working at
@alphaarchitect
as VP of Financial Education. That's right folks! Really thankful for the opportunity,
@RyanPKirlin
Sold a bike on Craigslist for more than I bought it on Craigslist 5 years ago.
Am I the world's greatest investor? It's been said, but I myself would not make that claim.
Why is Alpha Architect lagging other value strategies?
EBIT/TEV is what we use as a value screen. The spread between top 10% cheapest stocks by EBIT/TEV and the market just ๐keeps๐getting๐wider๐
This is wild how wide it's become.
Alpha Architect is looking to hire junior to mid level marketing help.
Weโll train you up beyond that role (if you want), but thatโs the role we need filled now.
Tasks include:
Managing email campaigns
Working to help design PowerPoints, โone pagersโ, etc.
When I talk about why it's important to use ETFs to defer income taxes, here's Charlie Munger explaining the difference in deferring taxes vs not:
It could be the difference between 13.3% returns and 9.75% returns AFTER TAXES.