@elonmusk My 75 year old mom just got a Tesla. What if you made FSD free for anyone over 70? The ones who most need and can least afford. You'd be liberating those who are homebound and making the roads safer.
Here's a question that sounds simple but trips up most PMs we talk to:
๐๐ ๐๐ผ๐๐ฟ ๐๐ถ๐ ๐๐ต-๐ฏ๐ฒ๐๐ ๐ถ๐ฑ๐ฒ๐ฎ ๐ฎ๐น๐๐ผ ๐๐ผ๐๐ฟ ๐๐ถ๐ ๐๐ต-๐น๐ฎ๐ฟ๐ด๐ฒ๐๐ ๐ฝ๐ผ๐๐ถ๐๐ถ๐ผ๐ป?
https://t.co/WCVOPM1SEL
@MrMojoRisinX We've worked with 100s of fundamental equity managers over the last 20 years. Your point is correct, we have the data that most managers' great stock selection is diluted by not-so-great portfolio construction @Alpha_Theory.
@absreturnchaser@hfreflection I don't recall an investment with a 100% probability of success. Forecasting downside is accepting the reality that you can lose money and leads to better answers by forcing the analyst to quantify the risks of the investment.
@hfreflection@Alpha_Theory Well said..."we can debate the scores and the criteria endlessly and thatโs the point... By being explicit... and recording / modifying your assessment on every investment over time, you can create a process around sizing that can be refined, communicated, and enforced."
@vinnillionaire@hfreflection@Alpha_Theory In advance, determine a Max Loss of fund value you're willing to risk on any bet. Let's say 2%. Then compare different risks. If your downside scenario is 20% then the max position size is 10%=2%/20%. Vol is 40% then max size is 5%=2%/40% and so on...
Dr. Kahneman taught us that weโre not as smart as we think and because of him, the world is a more rational place. I imagine heโs showing Amos the Nobel they would have shared.
In our 2023 Year in Review, we found that long positions with price targets outperformed those without by 4.9%, while short positions with price targets outperformed by 7.1%.โ
https://t.co/MDgxi9pb6A
#pricetargets#portfoliomanagement
What are your views on price targets?ย โ
Some investors think price targets seem to imply a sense of "false precision".โ
โHowever, our research at @Alpha_Theory shows that positions with price targets outperform those without price targets.โ โ
#pricetargets#portfoliomanagement
In 2023, optimal continued to outperform the average client, with the average client up +13.1% versus +17.8% for the average optimal portfolio.ย
Read more in our 2023 Year in Review: https://t.co/MDgxi9pb6A
#pricetargets#portfoliomanagement
For the last 12 years, a portfolio using @Alpha_Theory's optimal position sizing outperformed clientsโ actual sizing by an average of 4.3%. Optimal position sizing has demonstrated a 92% win rate, outperforming eleven of the past twelve years.
In my most recent article, I discuss my thoughts on @DEShawGroup's โMachine Teaching: What I Learned From My Optimizer" and how @Alpha_Theory can help fundamental managers build their own unique position sizing optimizer.
https://t.co/4Q10moYZPt
@realTigerCub While we're going down the position sizing rabbit hole, check out:
1) Turtle Creek: https://t.co/pXN6dNkaBU
2) DE Shaw's new paper on humans working alongside optimizers: https://t.co/03wDFPBt0m
@realTigerCub Our data says that fundamental managers are good stock pickers and forecasters. Less good at portfolio management. PM's know what matters but are inconsistent bc they're, well, human. Here's an easy improvement. Make your position-sizing heuristics explicit and then codify them.
Price targets play a crucial role in investment decision-making, but the strategies behind them can vary widely. How do price targets influence your firm's strategy, risk management, and overall approach to financial decisions?โ
#PriceTargets#RiskManagement
@Alpha_Theory gets to be part of an amazing community of process-oriented, self-improvers. See below for a client's thoughts on being part of that community.
POSITION SIZING / ALPHA THEORY:
Idea gen and research is the process of finding alpha. Position sizing and buy / sell discipline is the mechanism of maximizing it. I use Alpha Theory software to aid in position sizing decisions and buy/sell discipline. A ๐งตon our framework.
POSITION SIZING / ALPHA THEORY:
Idea gen and research is the process of finding alpha. Position sizing and buy / sell discipline is the mechanism of maximizing it. I use Alpha Theory software to aid in position sizing decisions and buy/sell discipline. A ๐งตon our framework.
@Josue46809943 @mycroftcap@SkepticalTsar@hfreflection If the manager runs their portfolio with neutral exposure (longs equal shorts) they would have no market exposure but most PMs run net long.
In the regression of returns, idio is what's left over after controlling for factors, so factor exposure by definition is not idio.
@ClarkSquareCap@hfreflection 2nd question. Tend to add to positions as they approach the bear case. But the orders of operations is to reunderwrite your thesis and if confirmed, then add to the position.