Why Active Investing is Better Than Passive Investing

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Active Vs Passive Cropped

The difference between passive and active investing is not difficult to understand. But even so, my standard attempts to explain the concept usually cause my friends and family’s eyes to glaze over…. Read more

Do Investment Newsletters Add Value?

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Investment newsletters are some of the most ubiquitous financial products on the web. But do they add any real value? Does anyone actually make money using them?

For most retail and and non-professional traders, the answer is a resounding no.

How many times have you read a newsletter touting picks with grandiose headlines? “XYZ stock is primed for 300% returns!” “This undiscovered stock could be the next 10-bagger!”

Astute and seasoned investors run far away from this sort of spin. These headlines are the work of master marketers whose goal is to tap into the greed center of our brains. They want us to run out and buy these stocks based on pure emotion. Forget about planning the trade! They don’t care if you make money in the long term. They have no real skin in the game. Even if you lose, they still win.

It is IMPOSSIBLE to achieve long-term success in the markets on picks alone. Read more

Why You Need To Red Team Everything

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Have you ever had an investment idea that you just knew was going to be a slam-dunk and make you a ton of money? So you put on a large position, maybe your whole nut, because why not… right? It’s a sure thing!

And you’re the genius who discovered it! Now you’re gonna ride this sucker all the way to the moon while leveraged to the tits.

You’re already asking for top shelf margaritas because your future profits are as good as in the bank. Dammit you deserve to treat yourself for all your hard work in the markets!

There’s not any possible downside to this trade. Those who say otherwise are dismissed with heartfelt sympathy for their lack of vision. Those poor fools….

Then… suddenly… the unthinkable happens. At least it’s unthinkable to you because you couldn’t conceive of such a thing.

The trade goes south. Read more

Ruthless Reductionism and Occam’s Razor

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In the classroom we were constantly praised and awarded for complexity. A desire for higher marks meant creating more pages of writing, more conclusions, more assumptions, more models, more complexity, more and more. Yet when we exit the sterile classroom and apply that approach to the real world in search of profits, it often translates into less success, not more. Complex approaches usually fizzle out, whereas simple ones, combined with basic common sense and perseverance, tend to bring home the bacon.

The market teaches this lesson the hard way. It will take the complex, highly involved PhD thesis and spit it right back into your face in the form of a giant loss or even worse, a completely blown out trading account. The market doesn’t care about fancy complexity and therefore tends to reward the practical street hustler over the high level academic. Read more

Invest with the Patience of a Sniper

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“You dumb f*$@ing pig!! What the hell do you think you’re doing!?”

My sniper instructor screamed in my face after I had ID’d and shot a target on the stalk lane, all while remaining hidden. The beratement confused me. I had just successfully completed a stalk lane, and on one of my first attempts at Marine sniper school too. This is not an easy thing to do. Luckily, I had plenty of time to ponder my instructor’s “feedback” as I did push ups in a full ghillie suit with my rifle and gear strapped on my back. Read more