What is this blog all about?
I am an investment junkie. I have spent years learning as much as I can about investing through both formal education (I have an MBA with a concentration in Analytical Finance) and my own reading and research. Unfortunately, I haven’t discovered any methods for getting rich quick. In fact, I haven’t discovered any method for beating the market average by even a modest amount which doesn’t require taking on some additional risk. (Is anyone still reading?) Instead, I’ve become convinced that a low-cost, index-fund-based approach is the best choice for nearly all investors.
This may sound like a disappointing conclusion. Is it a waste of time and money to spend time studying your investment options? Should all investors simply put all their money in a Wilshire 5000 index fund? Are even the most motivated and intelligent investors destined to average investment performance?
Fortunately, I don’t think time and money spent on investment education is wasted. The best answer for most investors is still a bit more complex than a total market index fund. The investor looking to optimize their portfolio still faces many difficult decisions regarding asset allocation, tax strategy, rebalancing strategy, saving levels during portfolio accumulation, withdrawal rates in retirement, etc. I believe that an investor who analyzes these decisions carefully has a good chance at reaching their goals sooner and outperforming the vast majority of their friends and colleagues in the process. In addition, any investor will face many distractions and temptations over the course of an investing lifetime, and an educated investor is more likely to ignore these distractions and stay the course.
As the name suggests, this blog is targeted at investors who want to see the data and do the analysis for themselves. I have found that most of my understanding of investing has come from sitting down and working through the numbers; I need to see it to believe it. I plan to discuss a variety of topics, and I will “show my work” at each step of the way by providing the spreadsheet, data, or program used to generate my conclusions. In many cases, my analysis will be based on the research of others, and I’ll provide references to these sources. Also, I’m planning to do all the analysis using software which is available for free. Spreadsheets will be created using Google Docs, and more advanced regression and simulation programs will be written in either Octave (a free Matlab clone) or R (an open-source statistical program). Documentation and tutorials are available on the web for each of these programs.
Finally, as a supplement to my posts on investing, I also plan to review some of my favorite investing books. The books reviewed will include popular investing titles as well as more technical books for those who want to dig a little deeper. I’ll try to relate the books reviewed to the analysis topics.