55 entries indexed
The Kelly Criterion helps investors decide how much to invest or risk per trade to maximize growth while managing risk. Using full Kelly can be too aggressive, so many use half Kelly for safer, steady gains. Risk of ruin calculations show how increasing position size greatly raises the chance of losing everything.
The U.S. stock market has been supported by passive investing and buybacks, pushing valuations above long-term averages. Rising interest rates have not lowered stock prices as expected, showing a shift in market dynamics. This makes the market fragile and prone to sharp, deep crashes when investor sentiment changes.
Investing well is more about controlling your emotions than knowing complex finance. Buy when others panic and sell when others feel like geniuses. Avoid making big decisions during life stress and stick to a simple, steady plan.
Edge in trading means having a small advantage that, with many trades, leads to consistent profits over time. Managing risk well and understanding volatility are key to making sure this edge pays off. True edges are rare and hard to prove, so careful analysis and many trials are needed to succeed.
A market maker earns money by setting bid and ask prices and managing risks like inventory and volatility. They adjust spreads and quote skew based on market data and inventory to balance profit and risk. When limits are reached, they stop quoting to avoid losses, making this a practical system for various markets.
Gold has rallied strongly due to large central bank buying since 2022 and big ETF flows in 2025. The rally likely signals expectations of rising global inflation, though tariff uncertainty is a key risk. The gold–USD divergence looks unsustainable, so gold may ease or the dollar may strengthen.
Optimists treat risk as an opportunity, not just a danger. They manage risk with research, conviction, and adaptability, not blind hope. Carnelian believes informed optimism and long-term focus create better investment outcomes.
Gold’s 2025 surge reflects its role as a collectible and safe haven more than a cash‑flow asset. \nHistorically it hedges extreme, unexpected inflation and crises, but not normal inflation. \nRecent price gains seem driven by demand, new buying paths, and fear, making gold a niche insurance asset.
Big Tech's AI arms race is turning asset-light winners into capital-heavy firms, which historically deliver weaker returns. Investors have bid up AI infrastructure stocks, concentrating market risk in the Magnificent 7. A value-based approach favors cheaper, lower-capex AI beneficiaries and under-the-radar adopters.
Easy access to information from AI does not remove investing edges. \nThe real advantage is careful thinking, patience, and understanding what the facts truly mean. \nUse tools to gather data, then read the source and think for yourself.
The microfinance industry is expected to recover in the second half of fiscal 2026. The report notes potential conflicts of interest because MOFSL and its affiliates may do business with covered companies. Analysts and their relatives do not hold equity in the subject companies.
Blackstone lost $42 million on one private loan, showing the risk of putting too much money in one place. Diversifying loans across many companies helps reduce big losses. Investors should focus on spreading risk instead of chasing high returns from a few investments.
NBFCs in India have grown rapidly, with credit and assets doubling in recent years and strong future growth expected, especially in retail and MSME segments. Banks are increasing funding to NBFCs, and digital technology is helping expand credit access to rural and small businesses. Despite some slowdown in unsecured loans and asset quality concerns, NBFCs remain vital in India's financial ecosystem and continue to gain market share.
The essay explains how chasing rare jackpot wins often leads most people to lose everything over time. This mindset has spread in culture, making many take huge risks that hurt the average person while only benefiting a few winners. The author suggests focusing on steady, reliable growth and finding deeper meaning beyond risky bets.
Before investing in a business or stock, check its revenue growth, competitive strength, and consistency of profit margins. Also, pay attention to cash flow, market growth potential, and valuation to avoid overpaying. Understanding the business cycle and having a margin of safety can help make smarter investment decisions.
Budget 2025 tax changes lift safe withdrawal rates to about 3.5–4.2% for lower-tax retirees, while higher-tax retirees should target about 3.0–3.5% or less. \nDynamic strategies (guardrails, skipping inflation raises) allow higher starting withdrawals but increase cash‑flow volatility; fixed real withdrawals give steadier income with lower SWRs. \nEarly inflation shocks and bad return sequences sharply reduce SWRs, so balanced portfolios (30–60% equity) and Monte Carlo–style planning improve sustainability.
ETFs, or exchange-traded funds, have become popular due to their low costs, transparency, and flexibility for various investment strategies. They provide investors with easy access to a wide range of asset classes and allow for efficient trading. As a result, ETFs have transformed the investment landscape, attracting many investors and challenging traditional mutual funds.
Investors often rely on subjective probabilities to make decisions, but confidence in those probabilities also matters. After experiencing losses, people may avoid good investment opportunities due to fear of further losses. To succeed, investors need to understand the relationship between price and value and choose opportunities carefully based on probabilities and payoffs.
This study analyzes nearly 30 years of investment returns in India across various asset classes like equities, gold, and fixed deposits. It highlights how inflation affects real returns, showing that while equities have strong nominal returns, their real returns are impacted by inflation. The research offers valuable insights for investors on constructing resilient portfolios in India's changing economy.
The internal rate of return (IRR) is often misused as a measure of investment performance, leading to misleading conclusions. It relies on unrealistic assumptions about reinvestment rates and can be manipulated by fund managers to show better results. Investors should be cautious when interpreting IRR, as it does not accurately reflect true rates of return.
The rise in private market investments is largely due to a belief in their superior returns, driven by the use of internal rate of return (IRR) as a key performance metric. Many investors mistakenly interpret IRR as a rate of return, leading to inflated expectations about private capital funds. It’s important for investors to understand that IRR does not equate to actual returns, especially for illiquid assets with complex cash flows.
The text discusses a wealth management company called 360 ONE WAM Ltd, focusing on UHNI (Ultra High Net Worth Individuals) with a target price of Rs 805. The company's growth is driven by strong execution capabilities and an emphasis on the UHNI segment, with a focus on investable surplus of more than Rs 250mn. Additionally, the text mentions key management personnel, such as Anupama Sharma, and highlights muted growth in total Active AUM but strong ARR net flows and AUM growth.
The text discusses the benefits and risks of alternative credit investments, including private market transactions like corporate and real estate lending. It emphasizes the need for thorough due diligence and understanding of risk profiles. It also covers factors like diversification, historic returns, and the challenges of incorporating alternative credit into institutional portfolios.
Today, August 28th, 2023, my company Newfound Research turns 15. It feels kind of absurd saying that. I know I’ve told this story before, but I never actually expected this company to turn into anything. I started the company while I was still in undergrad and I named it Newfound Research after a lake my […]
In this Masterclass, Saurabh Mukherjea will discuss how one can follow an automated investment checklist which when applied regularly, can reduce the chances of making investment mistakes and in turn maximize the potential of wealth generation for investors. This Masterclass would help us in selecting undervalued stocks and overweighting them in the portfolio combined with regular rebalancing.\n\nAs Warren Buffet once said, “Investing is simple but not easy”. Most of us don’t spend time dwelling on our errors. But if we did, we could create checklists that would eliminate those errors. To adopt a checklist is to embrace humility and admit our own fallibility. So please join us in this Masterclass as we do exactly that!\n\nRenowned journalist Govind Ethiraj will be hosting a Q&A with Saurabh Mukherjea after the Masterclass.\n\nKey points we will be discussing:\n- How to build a long-only portfolio with a Quantitative fundamentals approach based on good investing principles.\n- Hold 35-45 stock portfolio diversified ac...
Nofsinger brings together scientific insights from a variety of fields to form a holistic view of the role of human biology in financial decision-making.
The majority of your lifetime investment returns will be deter- mined by decisions that take place during a small minority of the time.
How to maximize returns during market panics
Richard Zeckhauser,Harvard University\r\nFromDavidRicardomakingafortunebuyingBritishgovernmentbondsontheeveoftheBattleofWaterlootoWarrenBuffettsellinginsurancetotheCaliforniaearthquakeauthority,thewisestinvestorshaveearnedextraordinaryreturnsbyinvestingintheunknownandtheunknowable(UU).Buttheyhavedonesoonareasoned,sensiblebasis.Thisessayexplainssomeofthecentralprinciplesthatsuchinvestorsemploy.Itstartsbydiscussing``ignorance,\"awidespreadsituationintherealworldofinvesting,whereeventhepossiblestatesoftheworldarenot known. Traditional finance theory does not apply in UU situations.Strategicthinking,deducingwhatotherinvestorsmightknowornot,andassessingwhethertheymightbedeterredfrominvesting,forexampleduetofiduciaryrequirements,frequentlypointthewaytoprofitability.Mostbiginvestmentpayoutscomewhenmoneyiscombinedwithcomplementaryskills,suchasknowinghowtodeveloprealestateornewtechnologies.Thosewholacktheseskillscanlookfor``sidecar\"investmentsthatallowthemtoputtheirmoneyalongsidethatofpeopletheyknowtobebothcapableandhonest....
This paper surveys private debt investors in the U.S. and Europe, focusing on their role in providing financing to firms that banks consider too risky. The findings highlight that private debt funds manage significant assets and often lend to companies that would otherwise struggle to secure bank financing. Additionally, the study reveals differences in investment criteria and competition perceptions between U.S. and European private debt markets.
A few things I’ve come to terms with…
Analyzing a company's cash flow statement is crucial for investors, as it provides insights into the company's financial health. The cash flow statement shows the amount of cash entering and leaving the business, and it is divided into three sections: operating activities, investing activities, and financing activities. The operating activities section reflects cash generated from the company's products or services, while the investing activities section includes cash used for investments. The financing activities section shows cash from investors or banks and cash paid to shareholders. Understanding these sections and key line items, such as net cash provided by operating activities and free cash flow, can help investors evaluate a company's performance and determine its value.
1/ Zillow made the same mistake that every new quant trader makes early on: Mistaking an adversarial environment for a random one.
Zillow made a common mistake by treating the market as random instead of recognizing it as an adversarial environment. This led to significant disappointments when their trading models failed to perform as expected. Ultimately, they ignored real-world evidence and relied too heavily on their faulty models, which hurt their trading success.
How to apply the famous betting formula in investment, trading and professional gambling
Nothing that’s happened had to happen, or must happen again. That’s why historians aren’t prophets. Wars, booms, busts, inventions, breakthroughs – none of those things were inevitable. They happened, and they’ll keep happening in various forms. But specific events that shape history are always low-probability events. Their surprise is what causes them to leave a mark. And they were surprising specifically because they weren’t inevitable. A lot of things have to go right (or wrong) to move the needle in what is an otherwise random swarm of eight billion people on earth just trying to make it through the day. The problem when studying historical events is that you know how the story ends, and it’s impossible to un-remember what you know today when thinking about the past. It’s hard to imagine alternative paths of history when the actual path is already known. So things always look more inevitable than they were. Now let me tell you a story about the Great Depression. “After booms come busts,” is about as close to...
Investors are hooked, and it won’t end well.
Ergodicity - the average outcome of the group is the same as the average outcome of the individual over time.
The book \"151 Trading Strategies\" by Zura Kakushadze and Juan Andres Serur aims to help academics, practitioners, and aspiring traders by describing various trading strategies without duplicating existing literature or including extensive empirical studies. It provides references for deeper analysis and includes source code for out-of-sample backtesting. The authors hope readers find the content enjoyable and useful for their trading research.
There are as many investment strategies as there are investment opportunities. Some are good; many are terrible. Here’s the one that I lean on the most when I’m looking for low risk and above average returns.
\"Coffee Can Investing\" by Saurabh Mukherjea offers practical advice on building a low-risk investment portfolio in India. The book illustrates how a Coffee Can Portfolio, built on consistent revenue growth, can outperform the stock market over time, even during crises. Investing in this way for over a decade can significantly increase returns compared to the Sensex index.
Banks are financial intermediaries that take deposits and make loans, and many investors misunderstand them. Poorly run, small banks with excess capital are common takeover targets and can reward investors if bought cheaply. Bank performance mainly depends on management quality and the bank’s business model.
The book discusses how certain Indian companies stand out for their consistent revenue growth and return on capital employed over the past decade. It highlights the importance of focusing on core business, deepening competitive advantages, and making prudent capital allocation decisions. These exceptional companies demonstrate how strategic management practices can lead to sustainable financial success.
\"The more you think you know, the more closed-minded you'll be.\"
Creditors should be cautious when financing risky companies with uncertain revenues and asset values. It is important to assess a company's operating margins, asset quality, and hidden liabilities to avoid surprises. Strong financial flexibility and a sensible capital structure help protect investments during tough times.
One of the turning points in my early career was taking a security analysis class taught by Tiger Cub John Griffin at UVa. There are some old posts in the archives on the topic, but needless to say it was a great experience for a bio-engineer and is part of the reason I moved away […]
Joel Greenblatt's book discusses the advantages of investing in spinoff companies, which often outperform the market. He suggests that understanding the motivations behind spinoffs can help investors find undervalued stocks. Greenblatt encourages readers to look for investment opportunities in corporate changes, like spinoffs and mergers, to gain an edge in the market.
The magic formula for investing helps find good companies at low prices and has historically achieved high returns. It has consistently beaten market averages over the years, even when applied to a large selection of stocks. By following the magic formula, investors can potentially achieve extraordinary long-term gains with minimal effort and risk.
This text discusses the difficulty of achieving greatness as an investor and explains why it is so difficult to do so. It highlights various traits that great investors have, such as confidence and an intense desire to learn from their mistakes, as well as traits that most investors share, such as an MBA or high IQ. It explains that the ability to compound money at 20% forever requires the right skills and knowledge from a young age and that reading or studying can only take you so far. Ultimately, it states that the true sources of competitive advantage for an investor are structural and cannot be learned later on in life.
At 20 years old, the author discovered a valuable company called Western Insurance Security Company while studying finance manuals. He highlights the importance of understanding a company's value before investing, using examples of successful businesses like See's Candies. The author emphasizes that finding good investments can lead to significant profits over time.