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I just got an email from a reader with a background in Bogleheads/Vanguard/Value investing philosophy.

They were looking for the best resources for understanding portfolio theory/diversification and risk.

This is what I sent

(Curious what else would be helpful to include)
Fooled by Randomness - really any Taleb book as they all have the same central idea but I think FBR is easiest to understand.

amazon.com/Fooled-Randomn…
The idea behind the Permanent Portfolio.

This is a great primer from @joshkaufman

joshkaufman.net/permanent-port…
@breakingthemark's welcome page and all the articles linked there are great.

breakingthemarket.com/welcome/
The Most Important Thing by @HowardMarksBook - amazon.com/Most-Important…
I just finished @ArtemisCapital and @vol_christopher's paper The Allegory of the Hawk and the Serpent and thought it was terrific - docsend.com/view/taygkbn
The risk section of @KrisAbdelmessih book list is great if you need even more suggestions

moontowermeta.com/the-investing-…

Against the Gods is on my shortlist as well.
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Taylor Pearson
@TaylorPearsonMe
This chart from 538 actually shows one of the main problems with many types of predictive models.

Your greatest volatility always exists in the future so any purely historical analysis is clipping off the tails.

To quote @paulg, history is merely all the data we have so far
Models with high BIAS tend to be simple and generalize well out of sample, but they may leave some explanatory power on the table

i.e. middling backtest but live results are more likely to resemble simulated results.
Models with high variance are more tightly coupled with the training data. They are highly explanatory in-sample but may not generalize well on unseen data (i.e. great backtest, poor live results).
Read 8 tweets
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Taylor Pearson
@TaylorPearsonMe
At this point, I've probably known a few hundred people start companies with outcomes everywhere from exiting to the tune of hundreds of millions to shutting down.

If I had to guess what variable is most predictive in that distribution, it would be Tempo
When I played football in college, at practice we had a clock while we were running plays and we were always trying to be on a pace to run 100 offensive plays per game.

The whole practice, our Offensive Coordinator would stand behind us and yell

"TEMPO TEMPO TEMPO"
The best CEOs I've seen do something similar to this.

They themselves move at a fast tempo and they focus on keeping the organization tempo high, even when it means more mistakes are made.
Read 6 tweets
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Taylor Pearson
@TaylorPearsonMe
At the end of every year I go through the process I teach in my course as a way to look back over the past year and extract any lessons and think about both long term goals and short term ones. However, it’s not something that I typically share.
As, I often get a lot of questions from friends and readers about what I am up to. I tried something out this year where I put together a Year in Review Update to send out to some close friends.
One of them suggested that I go ahead and share it publicly to let people know what is going on with me and maybe generate a bit of luck. taylorpearson.me/luck/
Read 4 tweets

Related threads

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Vitaliy Katsenelson
@vitaliyk
THREAD: Building an All-Terrain Portfolio

As investors, we feel like a traveler preparing to drive across an unknown continent. The road behind us tells us we should drive a race car. If the road continues to be as it has been, our trip will be fast, easy, and uneventful.

1/
But what if the road (market) that lies ahead is rocky, full of holes and maybe even strewn with giant boulders? A sports car will not get past the first potholes. What we need is a four-wheel-drive, all-terrain vehicle.

2/
This all-terrain vehicle will not have the speed or the sex appeal of the shiny red convertible, but it will complete the journey. Its position at the finish line will depend entirely on one unknown — the road ahead.

3/
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Cheap Investor
@CheapInvesting
The media is wrong. Warren Buffett is not a value investor and he hasn't been for decades. He was in his early years when he was generating his largest returns, because he had a small capital base and he could afford higher turnover in his portfolio. /1
As he's gained more capital, he's understandably shifted his focus to growth-at-a-reasonable-price while emphasizing low turnover (ideally a holding period of forever). This isn't because it's a better option than value investing, it's because he doesn't really have a choice. /2
Managing a capital base of his size using a value investing philosophy with higher turnover would be very difficult, if not impossible. I'm positive I would shift my focus from value stocks to "forever holdings" if I was in his shoes too. /3
Read 6 tweets
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Harsh Vora
@harsh_vora
Midway through Ronald Kahn's wonderful book 'The Future of Investment Management'.

The 1st half is solely focused on the evolution of investment management through the last 4 millennia.

And rightly so. Because #history matters.

A quick summary below.

[Retweet if helpful]
Investing as we know it today did not exist before the stock market crash of 1929 & the Great Depression that followed.

Slack regulations, inadequate company disclosures & the general inability to systematically analyse investments kept most investors out of the market.
This state of affairs, however, was soon changed by gurus like Graham, Dodd, Markowitz, Sharpe, Burr, Ross, & others who provided a systematic framework to analyse securities, define risk, & efficiently manage portfolios.
Read 25 tweets
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Investment Books
@Invest_Books
Investing Presentations:

(a) "The Checklist" by @MohnishPabrai: goo.gl/6Ft2dm (Courtesy: @valuewalk)

(b) Mental Models: goo.gl/z2uTLz

(c) "Value Investing" by Sanjay Bakshi: goo.gl/TokQoP

(d) @jvembuna on Value Investing: goo.gl/k2ogtA
Learning Resources:

>> October quest presentations from @PPFAS: goo.gl/nQVnsS

>> Wealth Creation Reports (1996-2018): goo.gl/Eq9Tpw

>> FREE course on Financial Statement Analysis: goo.gl/jm15Qi

>> Fidelity Learning Centre: goo.gl/QAjzEB
Top 5 books that every serious investor must read

1. One up: amzn.to/2vcKPd8

2. Common stocks: amzn.to/2v8jYz2

3. Intelligent investor: amzn.to/2n31iw8

4. Rich Dad: amzn.to/2Mbf4rm

5. Five rules of investing: amzn.to/2MdEOn0
Read 15 tweets
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Zafar Shaikh
@Zafargs79
#INVESTING

I Had Always Been Mostly #Trader With Dash Of #Investing Thrown In Between When Started Out In World Of Stocks. Last 5 Years Have Been Revelation on Investing Front. I Have Formed My Own Investing Philosophy & it Has Been Hugely Rewarding In Terms Of Strategy ..(1/n)
And The Potential it Holds Out For Future! The Basic Premise For My PhiloSophy is CAGR (Compounded Annual Growth Rate). RJ is RJ Because of Phenomenal 40%+ CAGR Since 80's. So Basically, Achieving High CAGR Over Long Period Of Time is All That Is To Wealth Creation (2/n)
Now For CAGR, Name Of Stocks Don't Matter To Me, Neither What Business They Are In. Obviously, if Fundamentals of Business Are Good, More Investors & Traders Are Going To Back The Price UpTrend, So Fundamentals Are Critical, But Thats Not All There is To Investing (3/n)
Read 13 tweets

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