You have a choice of trusting the natural stability of gold or the honesty and intelligence of members of the government, and with all due respect to these gentleman, I advise you as long as the capitalist system lasts, vote for gold. – George Bernard Shaw An interesting dive into “Deep Web Marketplaces” by the […]

To lose one parent, Mr. Worthing, may be regarded as a misfortune; to lose both looks like carelessness. – Oscar Wilde, The Importance of Being Earnest Some thoughts on Uber, some blindingly obvious, some maybe not. I’ll say at the outset that I think Uber is a 10x improvement on existing cabs, and I have […]

A few points about the Sony debacle. Point 1: Sony is a clown show. Let’s be generous, and suppose the following is what happened. (We don’t know how the malware got in, because they seemingly have no clue, which makes me just weep with pity.) Hackers send a carefully crafted email to a Sony dim […]

A thought experiment: If you could buy an asset that returned the GDP growth rate, would you, should you do it? In other words, if you had a choice of Piketty’s r and g, from his ‘Iron Law’ equation r > g, which would you choose? Marc Andreessen said, “The funny thing about Piketty is […]

In this post we’re going to look at a simple way to visualize the power of diversification, and what correlation really tells us. Suppose you have 2 investments, A and B. You create a portfolio that consists of 1 share of A, and 1 share of B. How risky is the combined portfolio? It depends […]

Why is volatility a proxy for investment risk? This is a foundational question about risk, but I’m not sure it gets taught very often explicitly, it kind of gets lost in the math as just another simplifying assumption. One post in particular that motivated this is Howard Marks’s recent letter. Howard Marks inhabits the same circle of […]

In part 1 and part 2, we developed a framework for evaluating and identifying a good plan for retirement spending and asset allocation. We discussed how a CRRA (constant relative risk aversion) utility function and the related concept of certainty-equivalent (CE) spending can discount a stream of future cash flows based on their risk and […]

Last time we solved the problem of the perfect retirement spending plan, assuming a fixed known real return, and a CRRA utility function. This time, we’ll try to look at the problem from the other angle: Let’s assume a fixed spending schedule Then, let’s solve the problem of the perfect portfolio allocation schedule between US […]

Let’s see if we can come up with an ideal spending plan for a retirement, if you have a guaranteed annual return, for different levels of risk aversion. It’s probably been done before, but seems like a fun illustration of the power of numerical optimization with Excel, Python and DataNitro.

I was scanning the news the other day, and someone on Hacker News mentioned that half the items above the fold on StreetEYE were about Bitcoin. And I said to myself, I haven’t seen the neckbeards this excited since the early days of Linux. And it hit me, Bitcoin is the new Linux. Go back […]