Journal to portfolio afterlife

[black-opal]

So that's what investors do: they think about total returns by looking at the excess return from allocating to a particular asset class or investing style. And, as it turns out, many different asset classes converge on roughly the same risk-reward tradeoff: for every 2.5 points you add to the annualized standard deviation of an asset, you pick up around a point of return.

And there are other forms of unfavorable risk/reward tradeoffs: paying higher fees for exposure to the same asset class, for example, is a straightforward cut to returns with no attendant reduction in risk.

And the smallest stocks and worst-rated bonds have worse risk-adjusted returns than average, too: there are buyers who want a lottery ticket, but they're hard to short. So in this particular instance, taking extra risk doesn't pay.

How can we square these observations with the fact that many investors have achieved great success through concentrated bets on a handful of positions? One obvious answer is that some of them are lucky; "lottery ticket" is an accurate pejorative term for assets and strategies whose risk isn't commensurate with reward, but lottery winners do exist.

https://capitalgains.thediff.co/p/capital-asset-pricing-model-risk-reward-reasons

 

[black-opal]

So is now that time to move assets from money market funds back to bonds, anticipating that yields will in fact down in the near future? It's hard to say.
And perhaps this is not the right question. Because implicit in the above question is a deeper question: whether or not we should be focused solely on returns when building bond portfolios.
The answer to that question is: no. Because we don't care about just returns; we really care about risk-adjusted returns.

For that reason, a mix of money market and traditional bond holdings may offer the best medium-term risk-adjusted returns in the current market environment. Think of it this way: if yields come down, income from money market funds will decline, but the market value of bond holdings (especially Treasury bonds) may increase. That is a nice potential hedge, the type of risk management necessary in today's environment.

One-note: It is important that investors and advisors really understand the tradeoffs in including a significant allocation of long-maturity bonds in the portfolio. Such an allocation is probably more about chasing potential returns from a rally in bonds, rather than offering truly great risk-adjusted returns given where yields are today. It's also uncertain how much longer-maturity Treasury bonds would rally from current yields, so the upside from holding longer maturity debt is not clear.

Bonds Aren’t Boring Anymore, and Investors Need to Adapt | Quiet Wealth

It was easy to manage bond portfolios during the 40-year bull market that ended in 2020. Since then, things have gotten more complicated, but many investors, even asset management firms, haven’t adopted to the new environment.

www.quietwealth.com

 

[black-opal]

Tutte cose logiche ma è un riassunto valido per chi non sa cosa aspettarsi.

How to Emotionally Prepare for Retirement - Kindness Financial Planning

Have you started to emotionally prepare for retirement? If not, now is the time. It’s not enough to only prepare financially.

kindnessfp.com

 

[black-opal]

Obviously, multiples can't go to infinity, and equally obviously, paying a higher price for a given set of cash flows means lower expected returns. So it makes sense to assume that multiples mean-revert.

But it's equally true that timing these reversions is hard.

The best you can do is to make general claims that are broad enough to be almost useless: you'll have better results buying stocks when everything is cheap than when everything is expensive, but you'll miss a lot of returns if you anchor to the wrong metrics—and even if you do commit to this, the times when everything is statistically cheap are also times when it's very easy to be pessimistic.

If mean reversion happens over a sufficiently long and unpredictable period, it shouldn't be a big factor in your day-to-day decisions. But if it's ultimately inevitable, then it's worth periodically checking in to see if it's getting closer.

Should We Expect Valuations to Mean-Revert Over Time?

Plus! Diff Jobs; Sushi; Modeling Demand; China's Debt; Coevolution and Pulling Up the Ladder; The Venn Diagram Career

www.thediff.co

 

[black-opal]

Per determinare il default rate dei titoli ad alto rischio di credito non è importante solo il livello dei tassi fed e lo spread tra titoli IG e HY, ma anche quanti tra i titoli in scadenza vadano riemessi e la riserva di cash ed equivalenti accantonata dalle aziende, oltre che lo stato del ciclo economico che determina la redditività delle aziende.

https://twitter.com/x/status/1701039530634092628

 

[black-opal]

E' tutto relativo.

https://twitter.com/x/status/1700811835853959216

 

[black-opal]

https://twitter.com/x/status/1700890961134354858

 

[black-opal]

Il segnale geopolitico dei brics+6, da quello che capisco, è che come riserva forse è meglio comprare oro che comprare treasury americani. Non dico che sia più redditizio ma è più sicuro come riserva di valore, se lo hai a casa tua è molto più difficile da espropriare.

https://twitter.com/x/status/1700881250418864622

 

[black-opal]

Dopo diverso tempo che avevo notato che youtube consumava troppa cpu, mi sono deciso ad approfondire. Ho trovato questa soluzione che nel mio caso ha radicalmente migliorato la situazione, ho disabilitato ambient mode (illuminazione cinematografica in italiano).

Watch YouTube in Ambient Mode - Computer - YouTube Help

Ambient mode uses a lighting effect to make watching videos in Dark theme more immersive, by casting gentle colors from the video, into your screen’s background.

support.google.com

 

[black-opal]

https://twitter.com/x/status/1701161767844364439

https://twitter.com/x/status/1701115391651545463

https://twitter.com/x/status/1701166961017647580