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Why would a skilled stock picker ever invest in more than a few of her best ideas? Isn’t diversification for those who don’t know what they are doing? It makes sense to think that a skilled stock picker...

Long-term investors measure growth rate, but eat compound wealth. The four determinants of terminal wealth ratio (randomly selected portfolio’s terminal wealth divided by benchmark terminal wealth) and...

We will show that the single best metric predicting drawdown risk is portfolio volatility normalized (divided) by Sharpe ratio i.e. fraction of full Kelly allocation. We first derive the formulas for...

We will see how the diversification assessment framework provided by conventional finance theory is not applicable to what long-term investors really care about – compounded returns. As long-term investors...