Money For the Rest of Us The Five Layers of Investing - Which Layers Is Your Portfolio Allocated?
Aug 28, 2024
Discover the fascinating hierarchy of investing, from short-term trading to individual securities. Delve into the strategic allocation of portfolios and the unpredictable nature of individual stocks. Learn about the advantages institutional investors leverage for diversified portfolios. The importance of informed investment and community support shines as tools like Asset Camp equip individual investors. Explore the balance between diversification and simplicity, featuring examples of ETFs to enhance your investment strategies.
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Investing Operates In Layers
- Investing operates on multiple time-scale layers, each with different volatility and predictability.
- Choose which layers to engage with based on interest, skill, and the stories you tell yourself.
Avoid Short-Term Trading Traps
- Avoid short-term option and futures trading unless you have specialized infrastructure and expertise.
- Recognize zero-day options and high-frequency trades generally carry negative expected returns for most individuals.
Personal Short-Term Trading Experiment
- David Stein shares testing short-term trading in 2013 and failing to find an edge.
- He abandoned it and refocused on longer-horizon layers where he had more success.