Solid breakdown. Most people want the comfort of diversification and staying fully invested, but that comfort usually just guarantees mediocrity. The edge is in knowing when to concentrate and when to step back — and having the temperament to actually follow through
Super thanks for the mention! Made my day! And great write up, I like how the myths you lay out all come back to trade-offs, the ones we have to reconcile before making the real trades.
I didn’t get a chance to finish the article yet but one of the things that jumps out at me is they look at a 24 month deployment cycle. This is why I find the argument hard to accept because depending on what time frame you use and how long you investigate, they can give you a different result.
It makes sense that 24 months should lag that is a very long time that you’re missing out on potential gains but I would advocate period closer to 6 to 12 months which unless it’s a very up year shouldn’t make as big of a difference
Solid breakdown. Most people want the comfort of diversification and staying fully invested, but that comfort usually just guarantees mediocrity. The edge is in knowing when to concentrate and when to step back — and having the temperament to actually follow through
Thank you! Really appreciate you taking the time to read and comment.
I agree, diversifying only makes sense when you lack conviction.
Super thanks for the mention! Made my day! And great write up, I like how the myths you lay out all come back to trade-offs, the ones we have to reconcile before making the real trades.
Of course, thank you for the great content and supporting Serviceable Insights.
Thanks for the mention, Ben.
Thank you for your great writing and ongoing support
More info about DCA vs lump sum investing: https://ofdollarsanddata.com/dollar-cost-averaging-vs-lump-sum/
This chart from the article compares which strategy offered better performance over time: https://ofdollarsanddata.com/wp-content/uploads/2020/02/ls_v_dca2_outperformance_24m_SP-500-Total-Return_2023_02_05.jpeg
I didn’t get a chance to finish the article yet but one of the things that jumps out at me is they look at a 24 month deployment cycle. This is why I find the argument hard to accept because depending on what time frame you use and how long you investigate, they can give you a different result.
It makes sense that 24 months should lag that is a very long time that you’re missing out on potential gains but I would advocate period closer to 6 to 12 months which unless it’s a very up year shouldn’t make as big of a difference
That's a good point
I mostly invest in mutual funds, and it works well enough. Boring isn't always bad.
Nothing wrong with that. If your goal is to beat the stock market with stock picking though, this isn’t an optimal strategy
Great write up and thanks for the mention!
Appreciate the kind words and of course. You are one of my favourites on Substack.
Super interesting article, thanks for writing!
Thanks for taking the time to read and comment.
Really glad you enjoyed and thanks for Subscribing.
Hope you enjoy all the other articles to come.
Of course, this article is a perfect complement and alternative perspective to what I am learning in my MBA, so am happy to subscribe!
Particularly liked the reference to the semi-strong form efficient market hypothesis! I was like oh, I studied that! 😄
I unfortunately had to suffer through an MBA so I’m glad you are still enjoying it.
Hehe I love it, but it’s still early days!