Category Archives: Risk Management

Passive Investor High Risk of Large Drawdown

While many enjoy blasting market timing, very few admit passive investors face high risks. In fact, Monte Carlo simulations show that passive investors in S&P 500 face 50% drawdown with 50% chance. For small caps investors this risk increases to … Continue reading

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Markets Are Algo-Event Driven

Two days ago, equity markets worldwide were spooked by Italian political turmoil and possibility of a euroskeptic government that will drive Italy out of euro. The S&P 500 fell 1.2%. Next day, according to financial media, the market rallied 1.3% … Continue reading

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Financial Media and Trading Gurus Provide an Edge

The edge the financial media and trading gurus provide comes in the form of dumb money needed for systematic and skilled traders to realize alpha.

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To Gamble or Not to Gamble?

Below are the results and my conclusions from a problem I posed in Twitter yesterday about gambling.

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Arithmetic Versus Geometric Mean Conundrum

Although I liked the article “You Are Not a Monte-Carlo Simulation”, by Corey Hoffstein, there was a conundrum in it that needs to be addressed because I think that is important to do since it is the source of confusion.

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