Ilana Weinstein Likens Hedge Fund Industry to a Socialist Regime

Here is the link. 11,000 hedge funds, ...

Ilana Weinstein, I like to google her, here is the article I like to read.

中級滑雪第2課 : 小回轉 (Basic Short Turns)

Here is the link.

20191106 理財生活通-2 來賓：晨星基金 曾淑雲

Here is the link.

【名人理財】理財生活教母夏韻芬 買基金3不原則賺千萬

Here is the article.

基金操作「3不原則」，分別是：定時不定額、停利不停損，及以不變應萬變。


I like the idea to 將「定時定額」升級為「定時不定額」

大跌加碼　壓低投資成本

先看「定時不定額」。相較個股，由經理人選股操盤的共同基金最大優勢，在能藉由投資標的分散、時間分散，達到獲利細水長流目的，而利用每次投入攤平成本的定時定額，是最基本策略。但時間一久，累積金額愈大，新投入資金在「平均成本」效果上愈不明顯。「所以要真正做到攤平成本，就一定要記得在大跌時加碼，否則定時定額到最後，就是一包較大的單筆投資。」

將「定時定額」升級為「定時不定額」，夏韻芬的做法是，透過市場漲多少扣、跌多多扣的靈活操作方式，盡可能壓低投資成本；「新手投資人若想這樣做，可以設定一個報酬率，當作加減碼基準線。」


只有2種情況，她才會賣出基金，一是要用錢，另一是趨勢改變，「我不會在帳上虧損時，為了止血而賣基金，因為過去經驗證實，那反而是好買點！」

選0050不如選它！這5檔基金賺到2020年 ft.基金教母林奇芬｜下班經濟學#54

Here is the link.


中美貿易沒有止戰跡象，面對善變的川普，整個市場千變萬化！這時該如何挑選安全的基金呢？又該如何避開風險，賣在最佳的時機點呢？快跟著哲青來跟理財教母林奇芬學習吧！ 00:35 理財項目太多昏頭轉向?投資基金才能一身輕? 03:21 2019基金完全指南!從國際局勢找出安全投資! 06:09 中美貿易戰白熱化!姐選擇的目標卻出乎意料? 08:19 股票型基金百百款!三步驟評斷基金一次看透! 12:57 台股破萬點想進場?專家居然根本不看時機點? 14:31 簡單列出三個出場眉角!讓你通通邁在甜蜜點! 17:19 五檔基金就囊括市場趨勢?快來學學姐的配置! 20:36 面對配息基金迷思 專家:完全錯誤的投資觀念! 22:21 超夯南非幣基金!12%報酬率卻讓你越買越窮?

Recession 101: Part 3 of 5

Here is the article.

Top 3 ETFs for 2020

Here is the article.

Case study: 2020 emergency fund - Schwab US Dividend Equity ETF (SCHD)

January 14, 2020

Introduction

It is challenge for me to work on my emergency fund in 2020. I like to think about ETF called SCHD.

Case study

I like to generate some case flow so that every month I will have some dividend income.

Charles Schwab offers another significant lower cost ETF for family investment. This is among the best American dividend ETFs to explore. If you are keen on turning your portfolio into cash flow, the fund on large companies brings a stable dividend. Retirees seek to earn income from a portfolio without selling often use dividend stock as the main issue.

This means the ETF is passively managed to track the Dow Jones U.S dividend 100 indexes. It charges a very competitive 0.07% expense ratio.

SCHD Fund Highlights

1. A straightforward, low-cost fund offering potential tax-efficiency 

2. The Fund’s focused approach can complement a diversified portfolio 

3. Tracks an index focused on the quality and sustainability of dividends 

Top 7 Canadian ETFs You Should Own In 2020

Here is the article.

Case study: 2020 emergency fund - Vanguard Consumer Discretionary ETF (VCR)

January 14, 2020

Introduction

I like to set up some emergency fund in my TFSA account, so that I can withdraw the fund in emergency situation. What should I purchase? I come cross the article and the suggestion is to purchase Vanguard consumer discretionary ETF.

Case study

I like to set up the dollar amount, how much should I allocate to emergency fund? Is it safe to purchase if the recession hits in 2020?

Where to Invest $10,000 Right Now

January 14, 2020

Introduction

I am searching the idea where to put emergency fund? I come cross this article called "where to invest $10,000 right now".

Five investment experts

Here is the article.

The question on many investor’s minds is simple: Is it time to take some money off the table?

The rational answer is that trying to time the market has proven to be a fool’s game. That said, with the U.S. stock market nearly tripling in value over the past decade, and up more than 30% in just the past year, investors may want to ensure they have enough liquid assets so that they won’t need to sell into any downdraft—and can sleep at night.

I am thinking about this ETF: SHY, 1-3 year treasury bond ETF

How to play it with ETFs: For a good short-dated Treasury ETF for parking cash, while eking out a little yield, Balchunas picks the $17.5 billion iShares 1-3 year Treasury Bond ETF (SHY). It yields 2.1% and has a 0.15% fee. For those looking for an inflation-protected version of SHY, there’s the Vanguard Short-Term Inflation-Protected Securities ETF (VTIP), which has $7.3 billion in assets and charges 0.06%.

TLT - iShares 20+ Year Treasury Bond ETF

January 14, 2020

Introduction

It is the first time I start to study TLT ETF. It is so interesting to learn the annual return of TLT.

Return 

Here is the link.

Why TLT?

1. Exposure to long-term U.S. Treasury bonds 

2. Targeted access to a specific segment of the U.S. Treasury market 

3. Use to customize your exposure to Treasuries

Total return (%)  1y 14.93, 3y, 7.03, 5y 4.09, 10y 7/28, Incept. 6.68

Actionable Item

Ask myself why 1 year return is 14.93 for TLT ETF. I also like to look into IET ETF as well.

Case study: Florida home equity line and my IRA CD

January 14, 2020

Introduction

It is so interesting for me to review my history with a US bank, and what I learned from those years from 2006 to 2019.

I will write more later.

Case study

I knew that I saved near $15,000 IRA CD with the same bank holding my home equity line with $58,000 US dollars.

In order for me to keep the home equity line open, I already took out $38,000 US dollars when I left USA in 2010 April, and property value went down below $58,000 US dollars. I used IRA CD as a hedge to prevent myself get into trouble if the home equity line had to be closed for any reason.

Later in 2011, I got loan approved with the amount of $180,000 with Canada Scotia bank. I did not take the loan.

Overall, it was so complicated situations. My problem is not to invest time to learn personal finance, how to build wealth. Those are great time for me to build wealth, I was in my 40s.

From the Classroom to the Marketplace

Here is the article.

10th year to MP Lighting building

January 13, 2020

Introduction

It is my best favorite spot to take picture every year. I took a few pictures this morning when I walked to the office building. I like to show my pictures as well.

Cold weather 

It is such a cold weather day with snow and ice on the road. I like to memorize this special day.

TIME Names Andrew Lo One Of The 100 Most Influential People In The World

Here is the article.

Finance Genius Andrew Lo Explains How The World's Biggest Problems Can Be Fixed With Financial Engineering

Here is the article.

Exclusive: U.S. banking regulators hire math geeks of their own

Here is the article.

Ses 1: Introduction and Course Overview

Here is the video I like to watch.

Motivation

Time/ Risk

I like to watch all video lectures of the course, 13 weeks.

REST API & RESTful Web Services Explained | Web Services Tutorial

Here is the link.

Study https://www.flickr.com/services/api/upload.api.html, how to design Restful API.

The Best And Worst Rolling Index Returns 1973-2016

Here is the article.

I like to use rolling index return to help me made decision. When the market swings down, it is time for me to rebalance if I have more cash or bond asset, otherwise it is the market risk and I should take it as is.

How to learn finance and investment as a 53 year old?

January 12, 2020

Introduction

It is so easy to learn since there are so many good quality materials to work on. I like to write a short research how to learn finance and investment as a 53 year old.

Work on my reading skills

I think that I am a hard working person. But I have to work on my reading skills, analytical skills. One thing I can do is to journal my learning, so I can review my progress and then figure out how to add on more learning material.

It is most important for me to learn and build curiosity level. I like to learn how to think and ask questions in terms of thinking about investment. I should learn at least a few hundreds of hours first, and then explore all areas I have interest in first.

Monitor my own behavior carefully

It is always important for me to monitor my own economics behavior carefully. The mistakes will create huge difference in my asset, I have to show my mistakes not to take 2010 to 2019 ten years time seriously, I should have spent hundreds hours to learn by myself finance industry, and understand how to invest in index fund, know all the numbers in those well-written articles in famous media like Morningstar, US news, or MSNBC.

I should start to write personal finance as a Chinese, single Chinese, immigrant, Canadian citizen. It is important to showcase how I learn to invest and manage risk.

Accept myself

I have to learn how to take myself as is. Everytime I find my weakness, I have to push myself to work as an engineer and then start to find an optimal solution. I did make mistakes to create problems for myself, sometimes get depressed for one or two days, but I have to learn to care about myself,  forgive myself as a human being, and move on.

In order to live healthy and wealthy life, I should start early back in 2001 after my first laidoff to learn personal finance, and read investment books carefully. Instead it takes me another 18 years until I was 52 years old.

I did go through so many problems to learn to live a healthy and happy life. One of ideas is to go over those years from 1984 to 2019, and assume that I am a highly efficient person, how to make some corrections to make my life and work better.

I like to use one of statements I like to end my today's short research.

 lot of what you believe today will eventually be proven wrong. Never stop looking for truth. 
Daniel Crosby, Ph.D. Behavioral officer at Brink Capital, 40 yrs birthday meditations

Economics and Finance: Finance in Action

Here is the interview I like to watch. I like to know more about finance professors and learn how they think.

It is such a great surprise for me to learn something from finance professors.

Bob Johnson, PhD, CFA, CAIA Professor of Finance

Here is the linkedin profile.

10 Tips for Keeping a Cool Head in a Market Meltdown

Here is the link.

1. Reach for the 'off' switch
2. Pace yourself for the long haul
3. Keep clam, and pass the ketchup
4. Practice your rebalancing act
5. Watch China
6. Weather the turmoil with money market funds
7. When things look down, look up
8. Bubble, bubble? No such trouble
9. Say this three times fast: Weltanschauung
10. Adopt a beagle

They should recognize that investing is a marathon, not a sprint. Look at this as a buying opportunity. Stocks are on sale. Panic selling is never a good idea. It certainly could go lower, but I'm a buyer here.

Selloffs are all too common in market slumps, but that means there are bargains out there.

This is especially true if your portfolio is not in line with your targeted asset allocation.

Avoid These 8 Rookie Investing Mistakes

Here is the article.

1. Don't let emotions rule your portfolio
2. Don't chase performance
3. Don't trade too much
4. Don't forget about the fees
5. Don't try to time the market
6. Don't put all your eggs in one basket
7. Demand full transparency from your advisor
8. Be patient and learn

This is marathon, and you invest over multiple market cycle, not letting market dips scare you into selling at the wrong time. Create a written plan with your goals and objectives as well as your portfolio allocation. 

Disciplined rebalancing keeps you away from that market-timing trap. 

Individual investors and sometimes even professionals fall into the trap of trying to time the market, or in simple terms, buying high and selling low. 

"fee-only" advisors, who are paid only by their clients without any product-based payments. 

"fee-based' advisors, which means they collect these payments to some extent and charge clients a fee. Some are paid from the financial products they sell. 

7 Things That Can Derail Your Retirement Investing

Here is the article.

1. Being too safe
2. Not having a well-defined plan
3. Thinking too short-term
4. Ignoring the time horizon
5. Mismanaging your taxes
6. Being unprepared for life changes
7. Going it alone

Being too risk-averse can make retirement goals even more difficult to reach. Rely on diversification and patience to limit risk, and don't shy away from the high-return stock market too much. 

Never adopt a "just wing it" attitude when it comes to retirement. 

If the economy takes a downturn in the future, retirement investors don't want to be scrambling to make critical investing decisions in real time. 

Buying and selling stocks in an attempt to time the short-term swings in the market can be extremely difficult, even for professional traders. 

The rolling 30-year annual return of the S&P 500 index has consistently stayed between about 8 and 15 percent since 1926. 

8 Do's and Don'ts During Market Volatility

Here is the article.

The only certainties in life are death, taxes and market volatility.

1. Don't let emotions take over
2. Do have an emergency fund
3. Don't define risk as daily volatility
4. Do know the value of what you own
5. Don't lock in losses
6. Do get a portfolio checkup
7. Don't abandon your plan
8. Do diversify

A bigger risk is not achieving your long-term goals, something stocks, not bonds, are more likely to help you accomplish. 

Determine the intrinsic value not market value. This will enable you to decide for yourself if the market is fairly priced. 

Sell-offs are frequently followed by rebounds. 

Only if earnings and economic growth remain strong is a pullback a buying opportunity. 

There is a return to some ‘normalcy’ in the US markets

Here is the link.

How Market Timing Creates Investment Chaos

Here is the article.

Market timing, with extremely few exceptions, it's a losing battle.
 - Reno Frazzitta

About the only time market timing can reliably succeed, expert say, is when you employ a much gentler variant of it based more investing and rebalancing in a particular sector.

Market timing is a scam.
 - Robert Novy-Marx

The Evolution of an Investor's Worries

Here is the link.

I should maintain a well-balanced, globally diversified portfolio built around my goals, risk tolerance and time horizon. I would invest regularly in good market and bad and not worry so much about trying to time the market.

a short-term market decline

While it is still tough to stomach a short-term market decline, it makes it much easier to do when it is viewed as an opportunity to build positions in quality assets for the long term.

Ignore the short-term ups and downs.

10 Simplified Investment Management Principles

Here is the article.

1. Diversify
2. Stay the course
3. Invest for the long term
4. Focus on what is in your control
5. Rebalance regularly
6. Maintain liquidity
7. Accept normal market volatility
8. Invest incrementally
9. Noise is not a plan
10. Monitor your behavior 

Dean Witter

It takes courage to be optimistic about the future when pessimism abounds, but when the future is again clear, today's bargains will have vanished. 

Invest incrementally over full market cycles rather than attempting to repeatedly a market bottom. It is better to be generally right by investing consistently over time, rather than precisely wrong by investing all at once. 

Plunge. Soar. Optimism. Panic. Greed. Trigger words and sensational headlines may cause investors to make irrational decisions, but market timing is folly.

Warren buffet

The most important quality for an investor is temperament, not intellect. 

Are You at the Right Risk Level?

Here is the article.

At times of market volatility, some investors flee to cash, which they perceive as being safe. Cash, however, doesn't keep up with inflation and can erode future spending power if held in large amounts.

But a bad investment decision can easily be rationalized.

For example, people tend to believe that recent events will continue into the future. That phenomenon, known as recency bias, affects investments. It's what causes people to shuffle portfolio holdings in reaction to recent conditions rather than simply sticking to a predetermined plan.

A stampede into cash or a hasty swap of assets may feel good in the short term, but these actions have long-lasting detrimental effects.

"Sometimes investors can be susceptible to recency bias that can make them their own worst enemies by reacting to the story of the day," 

Investors should keep their eye on the long term rather than trying to time the market or chase performance.

Actionable Items

I like to work on my English vocabulary. 

flee to cash

perceive as being safe

Cash, however, doesn't keep up with inflation

a bad investment decision can easily be rationalized

recent events will continue into the future

recency bias, affects investments

As an investor, I should keep my eye on the long term rather than trying to time the market or chase performance. 

9 Psychological Biases That Hurt Investors

Here is the article.

Know the pitfalls of investing psychology

I should spend time to learn psychological biases, and know the pitfalls of investing psychology. 

1. Home bias
2. Make the easy choice
3. The gambling mentality
4. Short-term thinking
5. Recency bias
6. Overconfidence
7. Confirmation bias
8. Aversion to loss
9. Bandwagon (herd) mentality

Following the financial crisis of 2008-2009, many investors focused on defending themselves another market freefall, rather than on seeking opportunities to profit from the recovery as conditions stabilized.

We are prone to pay undue attention to recent news, either good or bad, and as a result we may underemphasize long-term averages or trends.

Overconfidence

In investing, overconfidence can create problems such as under-diversifying a portfolio or trying to time the stock market instead of sticking to a long-term plan.


He said he got nervous when others get greedy, and got greedy when others get nervous. That's a quaint way of saying he bought low and sold high, exactly what we are told will bring investing success.

The Fastest Ways to Lose Money in the Stock Market

Here is the article.

How to Stop Investor's Remorse

Here is the article.

10 Investing Tips for Busy People

Here is the article.

Should You Increase the Risk in Your Retirement Portfolio?

Here is the article.

7 Top Investing Strategies for an Uncertain Market

Here is the article.

• Avoid emotional decision-making.
• Invest in tangible assets.
• Buy a home.
• Play it safe.
• Try a covered-call strategy.
• Don’t sell at market bottoms.
• Consider alternative active investment strategies.

Behavioral psychology can play a number on investors. Although the annual return on investment in the S&P 500 stock market typically performed more than 9 percent on average over the last 90 years, most investors returns haven’t kept up. 

4 Tips to Weather Market Volatility

Here is the article.

5 Steps to Rebalance Your Investment Portfolio

Here is the article.

Review some facts

For a riskier asset, the 10-year average standard deviation of the SPDR S&P 500 ETF (ticker: SPY) is 12.69. A higher standard deviation means that there’s a likelihood that returns will deviate from the mean, both up and down.

Riskier assets, like stocks, have more dispersed returns and typically a higher standard deviation. For example, since 2008, the S&P 500’s greatest loss was in 2008, with a decline of 36.55%. While in 2013, the S&P 500 gained a 10-year record of 32.15%.

Understanding risk tolerance is an active process that incorporates personal, economic and market factors. It’s important to understand one’s time horizon, risk tolerance and risk capacity before constructing an investment portfolio. A comprehensive understanding of investment risk will minimize the likelihood of buying high and selling low.

This Simple Rebalancing Strategy Will Bring Harmony to Your Portfolio

Here is the article's link.

Trying to cut your losses – after all, that’s where the cliché comes from – is exactly why it is so hard to stick with a long-term horizon for investing. Knowing this can help you talk yourself through a jarring drop and perhaps celebrate gains a bit more.

Why It Pays to Be Careful When Rebalancing a Portfolio

Here is the article.

Follow a discipline

"You have to follow the discipline, and that means when equities are down you have to put more in," he says. "That can be the hardest thing to do, emotionally."

A year-and-a-day. 

The reason for this is that short-term capital gains tend to be taxed at a much higher percentage than those on long-term gains. But the good news is if you hold a security for a more than a year it will be classified as a long-term gain.

When not to bother. 

When to break the rules. 

A year-and-a-day. When you rebalance a portfolio it involves making a trade and if the securities you buy and sell are not inside a tax advantaged plan, such as a 401(k) or individual retirement account, there could be immediate tax consequences.

"Give yourself as much leeway as possible to let yourself take long-term gains rather short-term ones," says Adam Johnson, founder and author of the Bullseye Brief investment newsletter. "The ideal time to rebalance is 366 days," one day more than a calendar year.

The reason for this is that short-term capital gains tend to be taxed at a much higher percentage than those on long-term gains. But the good news is if you hold a security for a more than a year it will be classified as a long-term gain.

VC本垒打：全球风投史上最成功的28笔投资案例（上）

Here is the link.

Babe Ruth Effect

风险投资里的 Babe Ruth Effect

Babe Ruth是美国职棒传奇球星，全垒打之王，秘诀是：hit big or miss big。最赚钱的风投看走眼的投资比普通风投要多，但他们之所以最赚钱，是因为压到少数宝，赚翻了

45 Things Smart Investors Never Say

Here is the article.

Daniel Crosby, Ph.D. Chief Behavioral Officer at Brinker Capital

Here is the linkedin profile.

 lot of what you believe today will eventually be proven wrong. Never stop looking for truth.

13 Ways to Take the Emotions Out of Investing

January 12, 2020

Introduction

It is my personal finance research. I am a single person, and spend time in my home office whole day; I have to learn how to invest, since I will depend on my research and then make sound decision when bear market comes in 2020 or later. I have problems to learn to deal with emotions, since it is hard specially for a single person. I have to make choice to learn from reading an article and then be patient and learn a small thing a time.

13 ways to take the emotions out of investing

Here is the article.

1. Don't focus on the minute-to-minute returns - Daniel Crosby, behavioral finance expert
2. Don't lose your sense of history
3. Don't forget how markets work
4. Don't love your stock
5. Avoid the herd mentality if you're a venture capitalist
6. Allow for intuition before you invest
7. Figure out how much you can afford to lose
8. Ask questions
9. Take time to deliberate
10. Bounce your investing decisions of 'your group'
11. Think 'opposite' when it comes to emotions
12. Use food to train your brain
13. Follow a formula for asset allocation and proper rebalance

Case study: Sharpe ratio

January 12, 2020

Introduction

It is my personal finance research. I like to learn best business education like Stern business school, or other top business school. What I like to do is to understand the basic concept first, I like to take time to understand Sharpe ratio.

Case study

Here is the article about Sharpe ratio.

I will add my notes here.

The ratio combines standard deviation, the fund's return and the return that could have been earned on a risk-free holding like 90-day Treasury bills guaranteed by the U.S. government.

For example, 25 percent return, standard deviation of 10, at a time T-bills return 5 percent, a Sharpe ratio of 2 ([25-5]/10).

The result 2, is the "risk-adjusted return" the investor could earn for taking on the fund's risk.
Large Sharpe ratio is better. Less risk more return.

Sharpe ratio. Developed by Nobel laureate William F. Sharpe, this measure combines standard deviation, the fund's return and the return that could have been earned on a risk-free holding like 90-day Treasury bills guaranteed by the U.S. government.

In Morningstar's example, a fund with a 25 percent return and standard deviation of 10, at a time T-bills returned 5 percent, would have a Sharpe ratio of 2 ([25-5]/10), Morningstar says. The result, 2, is the "risk-adjusted return" the investor could earn for taking on the fund's risk.

With Sharpe ratio, a bigger number is better. In choosing between two funds with the same average return, you'd be better off with the one offering the larger Sharpe ratio. Sharp ratio is also unusual in that it is useful in comparing funds of very different types.

Case study: standard deviation in stock analysis

January 12, 2020

Introduction

It is my free personal finance research. I like to get up to Stern finance MBA level, so I have to push myself to understand the basics, the first one I like to work on is standard deviation.

How to work on standard deviation

I like to extract one example fro the article related to standard deviation topic. Here is the article.

The calculation to work on I have to go over word by word, and then quickly review the statements.

4 standard deviation an average return of 10 percent per year, how to calculate the fund's future return?
 Answer:
68% change to range between 6 and 14 percent, 10+/- 4% or its 10 percent average plus or minus the standard deviation of four, according to morningstar.
68% - normal distribution 95% of time, the return would be between 2 and 18 percent, or two standard deviations of the mean.

If you simply bought the fund on the basis of its 10 percent average return you might be pretty shocked to make just 2 percent of 6 percent.

Large standard deviation

Active traders like this volatility because it offers lots of opportunities to buy low and sell high. But people investing for retirement or college generally don't want big swings - not the downward ones, anyway.

Hold on to wait out the down periods

Holding an investment for a long time can overcome the damage from volatility. In that case, you're more likely to benefit from the average return and can afford to wait for a downturn to reverse. So if you like the average returns of a fund that has a large standard deviation, plan to hold on to wait out the down periods.

Standard deviation. This is defined as "the square root of variance." The math is tricky but generally this measures how much an investment wanders off of its average path, like a drunk who can't walk the white line. The bigger the standard deviation, the greater the risk. "Clients can relate to this measure as they understand the real world impact of volatility on their cash-flow decisions," Middleton says.

[See: 7 Ways to Trade Volatility with ETFs and ETNs.]

Morningstar it calculates standard deviation for mutual funds by looking at returns over the previous 36 months. The average return for that period is figured and standard deviation shows how much the monthly returns differed from the average.

A fund that gained or lost 1 percent each month like clockwork would have a standard deviation of zero, because there was no variation at all.

If a fund has a standard deviation of four and an average return of 10 percent per year, the fund's future returns have a 68 percent chance to range between 6 and 14 percent, or its 10 percent average plus or minus the standard deviation of four, according to Morningstar. And 95 percent of the time, the return would be between 2 and 18 percent, or two standard deviations of the mean.

If you simply bought the fund on the basis of its 10 percent average return you might be pretty shocked to make just 2 percent or 6 percent.

Of course, not everyone hates investments with large standard deviation. Active traders like this volatility because it offers lots of opportunities to buy low and sell high. But people investing for retirement or college generally don't want big swings – not the downward ones, anyway.

Holding an investment for a long time can overcome the damage from volatility. In that case, you're more likely to benefit from the average return and can afford to wait for a downturn to reverse. So if you like the average returns of a fund that has a large standard deviation, plan to hold on to wait out the down periods.

What Risk Data Should You Watch?

Here is the article.

beta, standard deviation, R-squared, duration, Sharpe ratio. 

In client reviews we tend to focus on standard deviation and Sharpe ratio for overall portfolio risk discussions" involving stock funds

We explain how volatility, defined by standard deviation, shapes expectations, particularly upside and downside, for future returns and how volatility can impact cash-flow decisions.

Volatility means the size of swings up and down. While two investments may have the same gains over time, or the same average gains on a yearly basis, one may notch steady returns like a bank account paying interest, while the other may have stupendous gains one year and losses the next.

I like to learn about standard deviation - a drunk who can't walk the white line. 

Standard deviation. This is defined as "the square root of variance." The math is tricky but generally this measures how much an investment wanders off of its average path, like a drunk who can't walk the white line. The bigger the standard deviation, the greater the risk. "Clients can relate to this measure as they understand the real world impact of volatility on their cash-flow decisions," 

Are You Investing or Gambling in the Stock Market?

January 12, 2020

Introduction

It is my personal finance research. I have to learn how not to gamble in the stock market, and learn to invest instead. I have to study early before next bear market comes, so I can invest more on equities and then invest long term.

More research

It is quick and easy way to read the article written on Dec. 12, 2017. I like to take some notes as well.

Here is the article.

An uncalculated risk is a random risk, such as flipping a coin or putting a chip on black. A calculated risk addresses what he considers the two main risks investors face: capital risk, or the risk of your investment losing money, and objective risk, or the risk of not achieving your investment objectives.

If you're speculating, your confidence may waver. 

Because speculation is wishful thinking, it's not rooted in reality.

If investing is diversifying your return over the entire stock market by purchasing a Standard & Poo's 500 index fund, speculating is trying to get large returns from a single investment you hope is right.

Gauge how emotionally involved you are in the process. Extreme emotions are generally a sign that you're speculating.

If you are feel euphoric, you're speculating. And if you feel terrified, you're speculating.
If you investments are keeping you up at night, you're probably speculating by taking on too much risk.

I like to read more carefully the following statement.

Speculating and investing both require understanding the risks involved, but while an investor would have a reasonable assurance of the principal's safety for a satisfactory return, a speculator may not. Investors have a longer-term perspective for the use of their capital, which is another factor that often distinguishes a speculator from an investor.

4 Popular Day Trading Strategies for Investors

Here is the article.

Momentum trading
Scalping
Swing trading
Market-Neutral trading

A Warning about day trading

95% of day traders ultimately end up losing money.

There is no difference between day trading strategies and gambling at a casino.

Bull markets tend to make day traders look more skilled than they actually are.

A well-balanced, long-term portfolio, rather than racking up trading expenses and costly short-term capital gains.

How to Tell If You're Addicted to Day Trading

Here is the article.

A day trader by any other name. Both gambling and high-risk stock trading generate a rush of dopamine in some people, says Lia Nower, professor and director of the Center for Gambling Studies at Rutgers School of Social Work in New Brunswick, New Jersey.

Stock trading can be a form of investing. But when the incentive becomes getting the dopamine-induced rush of making a trade, investors become gamblers in the stock market.

there are generally three sub-types of people who develop a gambling addiction:

• Those with no history of mental health problems who gamble for fun, but gamble more than they can afford to lose.
• People with histories of depression or anxiety, or child abuse or neglect, who are looking to escape from themselves or feel excited and alive.
• Pleasure-seekers or impulsive risk-takers, who often also engage in other high-risk activities like drug use.

Symptoms of addiction to day trading:

1. Spend more and more time on the stock market, such as continuously check your positions
2. Trading has become the main activity of your day
3. Feeling compelled to day trade and becoming restless or irritable when attempting to cut down on trading
4. Trying to recover losses and restore control by trading more, sometimes in increasing denominations
5. Your outside life being impacted by your trading
6. Suicidal ideation due to financial losses

Red flags that your day trading may be addiction

Trying to time the market

buying and selling stocks frequently rather than investing long term

investing in risky stocks 

Double diagnosis - self-treat feelings of depression with trading

Actionable Items

Is a single person at risk to be a gambler instead of investor?

Are you investing or gambling?

Here is the article.

The Downward Spiral of Trading Addiction

Here is the article.

Do not be a day trader or gambler

January 12, 2020

Introduction

It is my personal finance research. In order for me to learn more about day trader, understand the gambler, I like to work on a short research how not to be a gambler. I like to be a long term investor, like 10 year return, with annual loss of 30% or 40% acceptable.

How many mistakes I made as an investor from 1999 to 2019?

January 12, 2020

Introduction

It is so important for me to continue to learn how to invest. I like to find out that how many mistakes I have made from 1999 to 2019. I can quickly name a few right now, but I like to get a complete list.

Mistakes I have made

I like to name the most biggest one.

1. Time the market
2. Inflation risk
3. Buy high and sell low
4. Recency bias
5. Long term investing or gambler
6. Human nature - fear and greedy
7. Ignorance - not a learner
8. Decision making - impulsive decision making
9. Emotion not stable
10. Business mindset - work on impossible goals, Ph.D. degree, US greencard, friendship, the most important goal is to build wealth and grow rich.
11. Associate with wrong crowd

More detail

Time the market:

1. 2001 SOLD VIGRX fund - when the fund lost over $1000 dollar value from $3000 initial dollars investment.
2. 2009 Sold everything and put in Amtrust bank IRA CD

Inflation risk

There is 4% inflation risk. If I put 401 K and IRA into capital preservation fund, then I will lose 4% at least because of inflation risk.

Buy high and sell low

During times of financial stress, people lose 13 percent of their IQ points and make rash decisions, resulting in poorer decision-making, according to a study by Science magazine. It might be the reason why many people buy high while stocks are popular and prices are taking off, and sell low while they're panicking during a market downturn, instead of waiting until a stock price recovers a bit. 

Recency bias

Stock Market Buy & Sell Strategies For Financial Independence | Is It Time To Sell?

Here is the article.

2019

VTI > 27%
VGT > 48%
VYM > 20%
VPU > 20%
VTSAX  > 27%

Why not sell them all?

Index funds are self-cleansing

Three common strategies buy and sell

Decide what is best for us.

Buy and hold strategy - strategy 1
Buy low and sell high - strategy 2
Day trading - strategy 3

Go over each strategy one by one in the following:

Buy and hold strategy

Buy and hold strategy - work best for index fund
dollar cost average - buy in long period of time

Buy high in stock market - now it is too high - buy any time, your horizon time is long.

You buy stocks on sale at that time.

25 times your annual expenses

Don't sell it all! Your money needs to grow

4% rule - withdraw 4%

Buy low and sell high strategy

Buy low and sell high - strategy 2
It is hard to do. You have to do it consistency. It is next to impossible.
Buying low and selling high can't be ...

Hypothetical:
Apple $24/share -> sell apple share $50/share; you may buy blackberry. It is very slippery slope.

Example: S & P index fund

buy 2000, sell 2007 when it is high.

It is better to leave it in.

During the recession, you will continue to buy and hold them.

Day trading 

We know some day traders, lose one day or week. Like gambling, caught by the cycle.

Day traders is a full time job. How to maximize the chance?

Andrew W. Lo: "Adaptive Markets: Financial Evolution At The Speed Of Thought" | Talks at Google

Here is the link.

Case study: My Philadelphia trip in October 2014

January 11, 2020

Introduction

I came cross my advisor Prof. Jie Wu wechat post, so I like to share one photo we took together in 2014 with other professors. I was so naive and disorganized back in 2014 and got a lot of advises from my professor classmates. I only did one case study on the trip cost in 2019. I like to write one for Temple university visit and more.

Case study

It was so surprising to get invited, I was working on my Canadian citizenship application in 2014. I was waiting for the approval. I booked the trip from October, one day trip to Philadelphia, before that. I also spent one day in Florida to drop by to visit friends and my rental place in the city of Boca Raton.