I’m a million miles away
A Million Miles Away, song by Rory Galagher
I’m a million miles away
Sailing like a driftwood
On a windy bay
I have read hundreds of books on investment strategies. And, unfortunately, most of them are not helpful for everyday investors. A lot of the presented ideas are too risky, depend on assets that are not available in retirement accounts, use an over-optimized set of rules, or require simply too much effort.
With this site, I wanted to go in a very different direction. The main goal was not to be fancy, but rock-solid. I wanted to stay far away from extraordinary claims, and make sure my readers have realistic expectations of how their investments might perform moving forward. And I wanted to make sure that readers feel comfortable staying invested, even through rough markets.
Specifically, I wanted my strategies to be:
- Applicable to typical retirement/ investment accounts
- Well-behaved across a broad range of market scenarios
- Focus on lowering volatility, not maximizing returns
- Simple to implement, requiring only moderate maintenance effort
- Based on rules that can be explained with human behavior, and macro-economics
This led to the development of three distinct strategies:
- Safeguard: a managed bond strategy for conservative investing
- Commitment: a rock-solid centerpiece for balanced growth
- Opportunity: an aggressive trend-following strategy with market-like returns
The following chapters introduce these three strategies in full detail. While I won’t be sharing the exact strategy code, I will provide detailed information on the strategy rules and rationale, and their historical performance.
I firmly believe that combining multiple strategies to a meta-portfolio almost always leads to better results than investing in a single strategy. Consequently, I envision the strategies not being used standalone, but typically as strategy blends. Starting with Commitment as the centerpiece, we can tame down the risk with an allocation to Safeguard or amp up the returns with an allocation to Opportunity. This concept is known as Core-Satellite portfolios.
There are many advantages to using such strategy blends. By following multiple sets of rules, we avoid single points of failure. Even if one of the strategies fails to work well in certain market environments, we still have the others to protect our downside. Further, the strategies are not tightly correlated to each other. This leads to additional diversification benefits, improving risk-adjusted returns.
The last chapter in this section describes the family of strategy blends I have chosen for this site. These blends scale from conservative to aggressive investment objectives, and there should be a suitable blend for virtually any investor focusing on long-term success.