Investing is incredibly hard. Mapping observations to security price movements is complex to say the least. Often, the relationships governing these moves are unknown. Yet, this is the investor’s task. I’ve used this blog as a tool for exploring some of these connections. It’s been incredibly rewarding. Not only has writing brought many of my wrong ideas to light, but it refined my process for constructing an investment portfolio. I now have an improved method for mapping themes to actual concrete positions which I’ll illustrate here.
I’ve explored a wide spectrum of investment ideas over the years. I’ll admit, the applications aren’t always apparent. Take postmodernism’s influence in the markets for example, what’s the trade there? How does discussing that central banks don’t create money or that inflation is misplaced in a fiat currency regime improve my returns? Oddly enough, they have. Working through these kinds of topics helped me build an investment framework and a process for incorporating them into my portfolio.
Of course, I must start with a disclaimer. The following is not investment advice. It’s merely an illustration of how I might utilize various investment themes in my investment process. These are just my personal opinions and should not be construed as investment advice or recommendations to purchase or sell any investment, product or service; nor should this content be relied upon for making investment decisions. You all know the drill.
I take our core tenants seriously. Reason. Reality. Investing. I firmly believe that what is should dictate how I ought to invest. This sounds simple but I find it anything but. First, it’s nearly impossible to fully determine what something is. Investment markets are complex systems with many degrees of freedom. Realistically, I can only place things on a spectrum of certainty. But that’s OK. I can account for this.
Secondly, it’s hard to identify potential investment themes, let alone express them in market terms. Yet, this is the essence of investing. Capital flows are almost always impacted by real-world events; and when they are, there’s money to be made (and lost).