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Statistical Probability, Kicking the SNP500 and a Personal Update

Updated: Feb 7, 2023

Hi guys, its Money Maverick. Some of you have noticed the 3 week hiatus. This was not intentional. I really want to apologize for it. Here is some useful investment news, as well as hopefully a better update for readers from the various communities.

1) V-Bounce and the Swing of Things

Most of you are aware of my article on Aggressive Investing. This has proven to be particularly true in Covid-19.

The probability of a second wave of market-crashes is diminishing rapidly. There may be others who think otherwise, and this is just an opinion - but statistically speaking, the more a V-Bounce is Finalized, the less likely another wave will come.

There were many short term spikes that looked like the market would recover between 2007 - 2009, and even so for 2000 - 2002. Both Financial Crises are slightly different from the epidemic-type reasons for a market crash, but if history is not the worst indication it's becoming less and less likely that the market will suffer again.

2) Kicking the SNP500 in the Face

In the last few weeks, I have been exceptionally busy with existing and new clients on my portfolio which I've gradually begin to perfect.

Such an aggressive portfolio was ironically derived (source material) from Dimensional, which I'm still highly skeptical about but have applied and repurposed to my own style of long term investing.

While I wish I had learnt how to use software (I had to literally dig out books and do manual calculations on the correlations. Perhaps this is a big factor in why I haven't written anything in so long), the eventual result was pretty clear cut - all my clients have beaten the SNP500 as of several days ago. (YTD). This means from the beginning of this year till now, not a single person, even in a non-aggressive portfolio, has had lower returns than the SNP500 investor from the start, net of fees. It shouldn't be surprising. I was not met with hearty congratulations all around when I first discovered and announced this - reaction was mixed from non clients in particular, the savvy types who have learnt how to invest outside of the SNP500 or Robos (which usually have a ton of US-weightage). I commonly discuss beating markets with expensive funds (and I commonly deliver results also), but you could have easily 'beaten the market' this time round simply by expanding your investment range outside of the US.

SNP500 10 July
Shanghai Index, 10 July

It says a lot about people who are blindly obsessed with the US market (much like they used to be obsessed with the STI ETF) when even a different index could result in much higher yields this year, let alone some effort on a specialist like myself to find you an fund that can beat the above indices.

And even my conservative clients have beaten them as of the last few days.

Notice how I use absolutely no evidence in the slightest to suggest that I am some kind of brilliant investor. On my Facebook wall, I am very transparent about the limits of my abilities.

But you don't need to be a brilliant investor (apparently) to outperform people who have never learnt to explore other options.

There's nothing wrong with acknowledging the SNP500 is a generally good long term investment, but sometimes this is the result of not knowing how to keep an open mind.

Personal Update [Client Investments]

This brings us to the personal update. You can see that I was very busy making money for clients. Generally they've been very happy and I've been having a lot more appreciation lunches and a lot more reviews.

But Phase 2 has also been eating away at me because there's been a tremendous backlog at work.

There are many potential consequences for client investments doing too well.

Some consequences are

1) Fear of Pump and Dump: Which is odd, because these are MAS licensed investments. But of course, any experienced investor would be nervous (including myself) about a statistically improbable increase in value.

2) Desire to Invest More: A first world problem on the surface, but the truth is that it is much easier for a Investment Specialist to manage fear rather than greed.

Fear can be addressed with expertise and risk management considerations.

Greed, on the other hand, creates a conflict of interest that you didn't expect. Many clients cannot afford to get more greedy than the allocated Financial Planning so soon after the first one. There can be dire consequences in the medium term.

But I could be making serious money from that in the short term, as a consultant.

It is not easy to reject people who want to buy from you. And then there's the fear that their greed will persist and they will carry on with someone else.

You literally get punished for doing the right thing in the worst case scenario.

It can be very draining.

3) Dealing with Fallout from Robos: I've written about Robos on the blog before, and as known very well to my friends, I am actually a huge fanboy for Freddy at Stashaway.

I also simultaneously resent that the Syfe fella (Sheng Chiam or something) seems to have interviewed all my friends except me.

But such is Robos and you can see that I actively keep up with news from Robos.

I am not necessarily opposed to Robos. They have their uses. But the fallout from Covid was apparent.

Many people were largely dissatisfied with their returns in the short term (more due to not realizing these are long term investments in the first place than the nature of the investments itself).

The risk parameters of how much they could lose were either broken (due to Covid meeting the low statistical probability someone COULD LOSE THAT MUCH MONEY).

...Or their allocation was altered, in a manner not preferred.

Well at the very least, that's the kind of crowd Money Maverick attracts.

It's a very careful line to thread to even discuss this openly. But as this is my experience and not my opinion (meaning that clients have expressed their reasons for coming to me, not my theories), it is what it is.

So they want someone to figure their next direction out for them and the expectations are high. Very high.

And it can take weeks to do sufficient research to please new investors, which I dislike - and it can amount to nothing at all!

(Some people who come to me seem more inclined towards venting and complaining before giving up entirely and I never hear from them again.)

Personal Update

I've many commitments to attend to generally, but my number commitment is my clients. As a result, I had to finish issues first before focusing my attention on blogging.

Even though this is my duty first and foremost, I also have a duty to readers.

As such, you know where I stand, but I still apologize. Deeply.

I seem to have finished most of the issues and will see a slightly better schedule by the end of July/early August.

It will be easier to write from that point, and I have actually made many articles that are awaiting clearance so that I do not have to worry about potentially having my enemies try to report me to MAS under false pretenses or taking my things out of context.

So the blog will be alive again in a week or two, and the value to readers will be tremendous. That is my promise to all of you.

I am hopeful that are no investment emergencies and I am able to take a staycation for a few days, since I cannot see my girlfriend, who I miss dearly.

Money Maverick

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