Category: Due Diligence
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Know the difference between investment models and rules
Investment and trading rules abound. In a realm as complex as investing and trading, not having a set of rules by which to operate can be paralyzing. So a necessary part of thriving is to abide by a set of rules that relieve you of having to decide the same thing several times. “Disciplined” and…
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Flash, substance, and Occam’s Razor
What is the proof that some new application is better than the alternatives? After the Berlin Wall fell, demarcating the end of the Cold War, the financial world saw an influx of rocket scientists. Former engineers, physicists, and NASA scientists flooded Wall Street, the hedge fund world, and the managed futures world. I suspect they…
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Meta Questions on Evaluating Investment Processes
At its essence, due diligence on any investment strategy is aimed at answering whether the existing record is repeatable. Better said, when will the strategy be likely to perform well, however you define ‘well’. Decades of empirical evidence suggest that all investment styles episodically have their day, so after a while you begin to dismiss…