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Everyone's Report Card... Ouch!

Some months have passed since the start of this blog, and throughout those months the stock markets of the world (particularly of the United States) have done rather well. In the US there has been a strong rally since the November 1 of 2016 monthly chart low that has amounted to a whopping 17% gain— in SPY, the ETF that tracks the S&P500 index, as of June 1, 2017, if you had reinvested dividends.

A benchmark that's up on the Retail Backtest website that is based on 10 major ETFs of developed nations is up about 12% over the same period— again that's with dividends reinvested (total return). And so you may ask, "And how is the smarty-pants Proprietor of Retail Backtest doing with his project?" Or, "How are the smarty-pants hedge fund managers and their 'quant' buddies doing?" You had to ask!

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Famous Investor's Real Money Record vs. Buy and Hold

When deciding whether or not to invest in a particular fund, or to follow the advice of some advisory service, there is that concept that what you really need to do is take a look at the long-term record of its management and to give much greater consideration to the management with the longest record of good performance. Really good idea? Maybe not so much.

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Trading at the Speed of Light

One of the things that we have to keep in mind when putting together algorithmic means for portfolio management, especially if there is to be a substantial amount of trading, are the other ways in which the trading world has been changing due to electronics. It's not just computation that has changed; it's communication too.

I won't pretend to be a qualified historian of the stock and commodities markets, or of electronics, but it's not too difficult for me to cite some milestones for you— going all the way back into the 19th century. This is all just for a nostalgic look back. And I'm sure that readers under 25 years of age or so will find the discussion of the landlines telephone system to be something like a trip to a museum of natural history.
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"Just Give Me a Seat at the Table and I'll Figure It Out"

Danny Moses has been a securities broker and trader. He was on FrontPoint Partners' team during and after the 2008 subprime mortgage/Lehman Brothers debacle. FrontPoint was a hedge fund that anticipated the subprime crisis and profited very handsomely from it.

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I am posting this link here because Moses is critical of the current state of the market, especially the stock market, which he describes as being disconnected from fundamentals— from the actual financial circumstances of companies. In particular, he says that the ETFs that own a stock matter more than the financial health of the company.

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