Journal to portfolio afterlife (19 lettori)

portfolioafterlife

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Market declines are a necessary evil and the very reason the stock market has provided the large risk premium and the high returns investors can earn. But there is another important point investors need to understand about market declines. Investors in the accumulation phase of their careers should view such periods not just as a necessary evil but also as a good thing. The reason is that large declines provide those investors (at least those who have the discipline to adhere to their plan) with the opportunity to buy stocks at lower prices, increasing expected returns. It is only those in the withdrawal phase (such as retirees) who should fear sharp declines because withdrawals make it more difficult to maintain the portfolio’s value over the long term. Thus, those investors have less ability to take risk, which should be built into their plan.

Smart investors know that while they can’t control markets, they can follow Warren Buffett’s sage advice to avoid timing the market, and the key to being able to do so is to control one’s temperament: “The most important quality for an investor is temperament, not intellect.” If you don’t have a plan, immediately develop one. Make sure it anticipates sharp declines and outlines what actions you will take when they occur (doing so when you are not under the stress that such periods create). Put the plan in writing in the form of an investment policy statement and an asset allocation table and sign it. That will increase the odds of adhering to it when you are tested by the emotions caused by both bull and bear markets. And then stay the course, altering your plan only if your assumptions about your ability, willingness or need to take risk have changed.
 

portfolioafterlife

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What matters is not so much the “what” of a job, but more the “who” and the “why”: Job satisfaction comes from people, values, and a sense of accomplishment.
When one has a job, the factors that most affect satisfaction have little to do with the line of work. First, there are the uncontrollable variables: One study in the Journal of Applied Psychology of identical twins reared apart found that about 30 percent of job satisfaction is genetic. Then, there are the practical variables: Economists have found that wage increases raise job satisfaction, but only in the short term. The effect decays quickly as time passes. In all careers, regular wage increases are better for happiness than infrequent, larger raises.
Research has shown, for example, that all over the world job satisfaction depends on a sense of accomplishment, recognition for a job well done, and work-life balance. Teamwork, too, has a strong influence in collectivist cultures, but less so in individualist ones.
Decades of studies have shown that the people most satisfied with their work are those who find a fundamental match between their employer’s values and their own.
It helps to set goals in one’s work, such as increasing skills or responsibility. Some goals lead to more happiness than others, however. While pay increases push up satisfaction temporarily, money as a career goal does not. Volumes of research show that pursuing extrinsic rewards for work, such as money, actually hurts your interest in that work. For real satisfaction, you should pursue intrinsic goals—two in particular.
[...]
The first is earned success.
[...]
The second goal worth pursuing at work is service to others—the sense that your job is making the world a better place.
 

portfolioafterlife

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portfolioafterlife

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Perchè per le crypto va bene un indice pesato per capitalizzazione?

The great part about a market cap weighted index is that it is a natural momentum vehicle. Assets that ascend in value are given higher weightings and those that fall vice versa. This is even more important in crypto than equities. Just look back at the top 10 coins from 2017 which included Bitcoin Cash, Ripple, Litecoin, Cardano, Dash, Monero, IOTA and NEM. Cardano and Ripple are still there (for some strange reason), the rest are long gone way down the list and aren't coming back.

In Europa invece sì, possiamo, anche se ci vorrebbe un indice ancora più ampio di quelli tracciati degli attuali etp cryto-basket quotati, con almeno una ventina di crypto pesate per capitalizzazione...
The problem is, a market cap weighted index the average person can invest in doesn't exist.
... però questo è verissimo:
The construction of these indexes can also be quite arbitrary, which is unfortunately somewhat necessary given the prevalence of shitcoins and legacy assets with large marketcaps.
 

portfolioafterlife

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The Silver Institute forecasts growth of 5% this year for global industrial silver demand to a new high of 552 million ounces.
Industrial demand is half of total demand for silver, and should be responsible for about half of the price movement, says Robert Minter, director of ETF investment strategy at asset manager abrdn. The other half of demand comes from jewelry and investment use, where drivers are similar to gold, he says.
“Because of the demand sources, silver can be thought of as half gold, half copper,” says Minter. “Yet when we compared returns since the end of 2020, copper is up 28%, gold is down 2%, and silver is down 12%.” That implies silver prices should be much higher, he says.
im-489369.jpg


 

portfolioafterlife

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most of the payoff from bonds comes from their yield, and bond yields in the U.S. are at historic lows. So while long-term government bonds have returned about 6% a year over the past 100 years, the current yield on 30-year Treasuries of just 2.4% signals that returns are likely to be a lot lower going forward.
U.S. stocks have returned about 9% a year over the past 150 years, broken down into 2% inflation, 2% real (net of inflation) earnings growth, 4.5% dividend yield and 0.5% valuation expansion. Looking ahead, the bond market expects inflation of 2.5% a year over the next 10 years; real earnings growth might be closer to 2.5% if U.S. companies can maintain their recent pace; the dividend yield for the S&P 500 Index is about 1.5%; and with the stock market at or near record high valuation, further expansion is probably a stretch. That adds up to an expected return of 6.5% a year from U.S. stocks.
But none of that analysis is even possible with cryptocurrencies. Bitcoin, the oldest of them, has been around for only 13 years, so the record isn’t long enough to rely on. And it almost certainly isn’t indicative of the future. Bitcoin has returned about 220% a year during its short life, which is obviously unsustainable. Its annualized standard deviation has been 200% over the same time, making its volatility about 15 times that of the S&P 500 and more than 60 times that of bonds. As cryptocurrencies become more established, their returns and volatility are likely to drop significantly.
 

portfolioafterlife

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The chart at the right shows the calendar year drawdowns of the stock market vs the bond market. In short, a -10% decline in bonds is very bad whereas a -30%+ decline in stocks is very bad. So we’re talking about totally different animals here. A bond bear market is nothing at all like a stock market bear market.
bond_bear-1-480x268.png


At present, the current drawdown in bonds is consistent with levels that are close to the worst drawdown levels.
But how much upside risk exists in bonds at present? With the 2 year yield already at 1.6% it means that the Fed has already tightened quite a bit and is running out of runway. If we consider recent history as a guide then the recent 1.35% increase in rates has coincided with a 0.65% increase in the 10 year yield. Extrapolating that trend into the future means the Fed would invert the curve if they raise rates to ~2.5%. They aren’t going to do that and they likely won’t even let it get close to that.
When viewed over the proper time horizons bonds are always a good stock market hedge. This is true in rising rate environments AND falling rate environments. For instance, from the period of 1940-1980 interest rates marched steadily higher. But a 10 year T-Note earned a nominal return of 2.5% per year. More importantly, a 50/50 stock/bond portfolio earned 8% per year while reducing the standard deviation of a 100% stock market portfolio by 50%.
A high quality 10 year T-Note will earn 2% on average for the next 10 years. And it might lose 10% in the next 10 months on its way to earning that average 2% per year return. Nobody knows what the market is going to do in the short-term, but we know what high quality bonds will do over the long-term with near precision. That’s the main benefit of bonds – they dampen stock market risk and provide the certainty of income across specific time horizons even if they’re somewhat volatile in the short-term.
 

portfolioafterlife

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Data collected by Thinknum shows that developers are working hard on proof-of-stake models, as evidenced by the number of GitHub commits over the last two weeks. Also of note: Ethereum, which currently runs on a proof-of-work system, is currently in the process of transitioning to a proof-of-stake system, commonly known as ETH2 or Ethereum 2.0. This means Ethereum will be able to reap the benefits of proof-of-stake systems, such as scaling up to thousands of transactions per second compared to its current average of 16 and eliminating environmentally harmful mining.
powchart_(1)-3790x2213.png



Ethereum staking is already live, and the Ethereum Foundation plans to move the entire chain to a proof-of-stake model by the second quarter of 2022 — though this date has been delayed several times. Its promises to stakers are much less impressive than other coins, though. Currently, staking ETH yields about 5% APY, but an individual running a node must lock up 32 ETH, about $100,000, for an entire year in order to reap the rewards. Users can pool together to hit this minimum, but there’s usually a fee involved — Coinbase offers automatic ETH staking, for example, but it takes 25% of your rewards.
Bitcoin remains the most popular and valuable cryptocurrency, but the environmental cost and low scalability of proof-of-work models may not be suited for the future of crypto.
 

portfolioafterlife

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Quando leggo queste ricerche devo ammettere che mi viene un po' da ridere... che valore aggiunto ci possono dare informazioni finanziarie così lontane sul value factor rispetto al mercato finanziariazzato moderno?

The new research finds that the value effect was decidedly strong from 1866-1926, much more so than in the 1926-1963 era and after 1991.
value-1.png


 

portfolioafterlife

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For now, the article advises, skip ESG. Currently, investors seemed more concerned with big dividend yields than clean energy and its societal benefits.
BRK.png


 

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