Whisky Investment – Cask Is King (Are Whisky Casks A Good Investment?)

Whisky Investment – Cask Is King (Are Whisky Casks A Good Investment?)

Are whisky casks a good investment? Is it worth buying a cask of whisky? Alcohol has for thousands of years been a vital part of human culture (whether you like it or not). Whisky though, a result of distillation, was discovered by monks as late as 1100-1300. In this article, we look at whisky as…

How To Hedge Against Tail Risk In The Stock Market (Tail Risk Hedging Strategies)

How To Hedge Against Tail Risk In The Stock Market (Tail Risk Hedging Strategies)

Tail risk is a form of portfolio risk that arises when the possibility that an investment will move more than three standard deviations from the mean is greater than what is shown by a normal distribution. Tail risks include events that have a small probability of occurring, and occur at both ends of a normal…

How Did Ray Dalio’s The All Weather Portfolio Perform During Covid-19?

How Did Ray Dalio’s The All Weather Portfolio Perform During Covid-19?

Ray Dalio’s All-Weather Portfolio was constructed to stand the test of time, no matter the investing climate – be it inflation, deflation, or stagflation. How did the portfolio perform during Covid-19, a period that witnessed enormous volatility? Ray Dalio’s All-Weather Portfolio performed very well during Covid-19. While the stock market dropped 30%, the All-Weather Portfolio…

Why Tobacco Stocks Outperform (Why Tobacco Stocks Are A Great Investment)

Why Tobacco Stocks Outperform (Why Tobacco Stocks Are A Great Investment)

Some months ago I wrote an article about the historical performance of so-called “sin stocks”. Tobacco companies have performed the best in the US, and alcohol stocks in the UK. In this article, I briefly argue for the reasons why and why they most likely continue to outperform. Tobacco stocks outperform the market because they…

Why We Can Expect Lower Returns Over The Next Decade

Why We Can Expect Lower Returns Over The Next Decade

2010-2020 produced better returns than the historical averages: From the start of 2010 until today, 27th of July 2020, S&P 500 returned 250% (dividends reinvested), which is a CAGR of 13.3% annually. Pretty impressive! Is it realistic to expect the same or at least close to 13%? Typical after a decade of strong returns, optimists…

Expected Returns In A Zero Interest Rate Policy (ZIRP) Environment – Which Asset Class Is Best

Expected Returns In A Zero Interest Rate Policy (ZIRP) Environment – Which Asset Class Is Best

The last decade has produced fantastic returns in most global asset classes (commodities excluded), helped by enormous interventions by central banks. Can we expect similar high returns in the coming decade? More importantly, what is the best asset class when the interest rates are close to zero? ZIRP – what is it? ZIRP is the…

Should You Invest In Stocks Or Real Estate (Or Both)?

Should You Invest In Stocks Or Real Estate (Or Both)?

Most people invest in real estate, perhaps quite logically since this is a very easy business model to understand. Equity (stocks) is perceived as riskier and thus less desirable as an investment.  The aim of this article is to give some pros and cons with both asset classes (I’m considering direct investments – not mutual…

Why Is Diversification Important In Investing? (Benefits And Advantages)

Why Is Diversification Important In Investing? (Benefits And Advantages)

Harry Markowitz won the Nobel Prize in 1990 for his work in showing mathematically how you can both reduce risk and create better returns by diversifying across regions and assets. Risk is of course measured in volatility, ie. how your assets fluctuate in price. Such a theory was new when it was first released in…

How Much Can You Pay For A Quality Company And Still Make High Returns? (Future Returns For Quality Stocks)

How Much Can You Pay For A Quality Company And Still Make High Returns? (Future Returns For Quality Stocks)

In this article, we look at how much you can pay for a quality company and still make high and acceptable returns. Perhaps surprisingly, you can pay quite much if you manage to find quality stocks. I use examples and practical calculations to prove my points. Introduction and summary: In an article a few weeks…

Why The Mental And Behavioral Aspects Are Equally Important As The Strategy

Why The Mental And Behavioral Aspects Are Equally Important As The Strategy

No matter how good strategies you have, they are most likely worthless if you can’t execute them properly. What looks like a piece of cake on paper, is completely different in the real world when you are risking your own hard-earned money. Will the strategy continue to perform after a drawdown? Is it just a…

Dollar-Cost Averaging: Beat The “Experts” And Build Wealth Over Time (An Example)

Dollar-Cost Averaging: Beat The “Experts” And Build Wealth Over Time (An Example)

Summary and introduction: Research shows that the majority of investors underperform the broad market indices. The most likely reason is due to frequent buying/selling and behavioral mistakes. When you are trying to “outsmart” the markets, you most likely end up losing to the market. To successfully invest you actually need to do as little as…

Compounding – The Magic Of A Long-Term Mindset And Delayed Gratification

Compounding – The Magic Of A Long-Term Mindset And Delayed Gratification

“Compound interest is the eight wonder of the world. He who understands it, earns it….he who doesn’t, pays it” -Albert Einstein Presumably, Albert Einstein said the words above, and likewise, Benjamin Franklin said that time is money. Unfortunately, we seem to forget these very simple principles when it comes to most decision making – be…

Why Women Are Better Investors Than Men (Women Outperform Men In Investing)

Why Women Are Better Investors Than Men (Women Outperform Men In Investing)

Numerous studies suggest women are better investors than men, which of course might hurt the egos of many men. Why are women better investors than men? It’s because women make investing simple. Charlie Munger once said the best thing to do is to “sit on your ass” and let your capital compound without much stress…

Does Valuation Matter? Less Than You Think If You Buy Quality

Does Valuation Matter? Less Than You Think If You Buy Quality

Summary: S&P has an estimated P/E of 23 for 2020. Rich valuations sometimes make the best companies’ share price languish. Low interest rates justify high valuations. Indexers might suffer more from high valuations than active investors. How important are growth and valuations? I look at theoretical returns under different valuations and growth. It turns out…

Interview: Short-Term Trading Is A Zero-Sum Game, Investing Is Not

This week I was interviewed about my trading philosophy. In the interview, I mentioned how difficult it is to make money daytrading or swingtrading for short-term profits. This is mainly a zero-sum game, I will even say it has negative expectancy due to commissions and slippage. Opposite, long-term investing has a positive expected return, given…

The Best (Little Known) Investment Advice From Warren Buffett

The Best (Little Known) Investment Advice From Warren Buffett

Warren Buffett, the Oracle of Omaha, has been a strong advocate of buying only what you truly understand and only companies where you can estimate future earnings with a certain degree of accuracy. This requires that you only invest in companies that are within your circle of competence. I guess all of this is well…

Sin Stocks And Performance (Why Sin And Unethical Stocks Outperform)

Sin Stocks And Performance (Why Sin And Unethical Stocks Outperform)

A certain group of stocks has outperformed the rest of the stock market by a wide margin: Sin stocks. We can also label these stocks “unethical stocks”. Sin stocks outperform the market because the industry has high barriers to entry, has high margins, requires little capital, the products are addictive, and regulation leads to oligopoly…