Alphablock

Tag: Modern Finance

  • ChatGPT helping me win a Nobel Prize in Economics – I

    ChatGPT helping me win a Nobel Prize in Economics – I

    MP – Do you know who got the Nobel Prize in Economics in 2013? CG – The Nobel Prize in Economics for 2013 was awarded to Eugene F. Fama, Lars Peter Hansen and Robert J. Shiller “for their empirical analysis of asset prices.” Fama and Hansen were awarded the prize for their work on financial…

  • Why is Shopify in top 10?

    Why is Shopify in top 10?

    TSX 60 are the most important 60 companies in Canada and Shopify [SHOP] is one of them. What we fail to understand is why SHOP after falling near 90% is not at the bottom of the weightage list among the Canadian 60 components list. Why is it in the top 10? And why does it…

  • How BSE 100 missed the Adani’s?

    How BSE 100 missed the Adani’s?

    Did you know that India’s most prominent 100 companies mapped as S&P BSE 100 experienced its emerging moment when in a matter of nearly 36 months, four Adani group companies scaled up 1000 to 2000 times? They continued to fly under the radar as they did not have enough size [market capitalization] to get a…

  • Where are the FANGs?

    Where are the FANGs?

    Investors may find it hard to believe that there can be a systematic process, a machine, with a scoring system that anticipated the future on January 2022 at the market peak and decided to underweight the FANGs so much that not even one featured in the top 10 list. There are many ways to explain…

  • The Active SPY!

    The Active SPY!

    This is not intuitive thinking but your passive SPY (S&P500 ETF) sitting in your pension fund is only passive and low risk in perception. What you call a zero fee (or near zero fees) portfolio is not only concentrated but it is as concentrated as the most active portfolios in the world. We compared Berkshire…

  • Faucet to Finance

    Faucet to Finance

    The story of modern finance starts from a faucet. The Navier–Stokes equations is considered to be the first step to understand the elusive phenomenon of turbulence. The Clay Mathematics Institute in May 2000 made this problem one of its seven Millennium Prize problems in mathematics. There is a US$1,000,000 prize to the first person providing a solution for a…

  • Why A New Smart Beta?

    Why A New Smart Beta?

    What is Smart Beta? And why do we need it? Smart Beta is a method to rebuild a portfolio with a weighting scheme different from the market capitalized weightage method. The weighting scheme can be based on fundamental factors different from size e.g. revenue, economic value etc. Most popular benchmarks today are built using the…

  • Warren, SPY, Machines and Concentration Risk

    Warren, SPY, Machines and Concentration Risk

    Concentration is the most undermined risk working against long-term wealth generation. The reason you have not heard about it is that both active and passive investment management indulge in concentrated portfolios and don’t think there is anything wrong with the approach. In addition, human active asset managers’ skill of stock selection is rare, and hard…

  • The S&P 500 Myth

    The S&P 500 Myth

    Abstract The nearly USD 50 trillion passive investment management industry has grown over the last 50 years primarily based on the claim that 9 out of 10 Asset managers can’t beat the market, net of fees over a 5-year rolling period. This claim assumes that the S&P 500 has a superior methodology that is unassailable.…

  • How Physics Solved Your Wealth Problem!

    How Physics Solved Your Wealth Problem!

    While Robert Solow suggested not to think of Economics as Science [1], Andrew Lo warned us about the dangers of using Physics to build economic systems [2]. Physics has been a late entrant to the world of Finance.