Marc De Mesel: Investment Strategy Breakthroughs Since Newton

  • Saturday, 09 November 2019 19:24
Marc De Mesel: Investment Strategy Breakthroughs Since Newton © Marc De Mesel
Isaac Newton was first to predict movement of planets but famously said he could not predict where the madness of crowds could take a price, and lost a fortune failing to do so. Since then, 400 years ago, little has changed in the field of investing. Unlike medicine that made great steps forward by requiring claims be critically evaluated under scientific method of repeated testing and proving, before accepted as true, investing, like medicine 200 years ago, is still dominated by charlatans predicting the future using mere guesswork or unproven untested methods colored by wishful thinking, and as result more often than not fail to correctly predict the market moves, causing their followers to lose money or opportunity. Luckily, there have been some great advancements made since Newton, commodity cycle theory, that shows stock market to be driven by supply/demand commodity cycles, well explained by Marc Faber in his book 'Tomorrow's Gold, Asia's Age Of Discovery' (and my videos on 100 year returns) as well as discovery of The Kelly Criterion, a formula that will give u the optimal allocation size for a given risk/reward, first applied to markets, and well explained by, Edward Thorp in his book 'Beat The Market, a Scientific Stock Market System'. Both of which when combined lead to superior investment returns. Other insights that did not make 'great leap forward' cut but are valuable too are Benjamin Graham his 'Buy only when you have a Margin of Safety', Peter Lynch 'Invest in market u know, where u have Edge' as well as the Young Warren Buffett 'concentrate to build wealth, diversify to keep your wealth' & 'better to buy great company for good price than good company for great price'. Not mentioned in video but I would add that since investing, like medicine or engineering, is a profession requiring one to combine many insights to get great results, the track record is very important to judge whether one is good at investing or not. This can be measured exactly by using agreed upon nominator such as Compound Annual Growth Rate in USD. Of course hard to verify the exact numbers but just like with a good doctor or engineer, one can verify if he indeed did a great job here and there. Hence why I share my past returns often, and keep all my video's and tweets online so one can verify my calls made in past. My calls are also not just of market direction, but probabilities, target prices and my allocations chosen for my total portfolio. This sharing of past performance by investors has undoubtedly become more important since Newton his time, but like the other great insights, is also still greatly undervalued. Links: Great interview with Edward Thorp

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