Recently, I’ve listened the book “Chaos Kings: How Wall Street Traders Make Billions in the New Age of Crisis”
They talked about left tail investment as a method to reduce your risk exposure against Black swans, instead of allocate part of your portfolio to Gold, Bonds,…
Gold miners. I just bought AEM today.
Cross with the stockpicker thread…I had a look just now, insane appreciation. Index investing may be safe and all, and I know I lack the guts to pick stocks but damn if one picks a good stock the gains are crazy.
This is the whole reason there are so many active funds, so many active funds and so much interest in stock picking
Index investing is mainly for wealth preservation and compounding. But life changing gains will never come from index investing
But if asymmetric gains are being sought, active stock picking is only way. Of course very few people end up succeeding in this game. And many don’t
That’s the problem isn’t it, thinking it through it’s obvious that unless it’s a combination of extreme savings rate and extreme bull run (like 2010-2024), or a very long time frame index investing will leave one better than one started, and better than most, but not by any means rich. I mean, sure, one can start at 25 and index until they’re 65 and it’s likely they’ll have made a very nice, self-feeding nest egg but by then it’s questionable how much they get to enjoy it!
If someone contributed every month for 40 years and had 5% CAGR real return (inflation adjusted), they will have approx 3X money versus their total contribution
Is it good, YES.
Is it life changing ? NO
We need to understand that passive investing is passive. So it can only give us limited benefit. Our main contribution is coming from income from our active work.
The person who is creating value gets most benefit . These are people who build new businesses, products and do deep research to find highly valuable businesses.
Isn’t the whole premise of FIRE that you can control that more or less totally with saving rate? (The highest the fastest you can FIRE, but the relationship is pretty direct).
That’s how you do FIRE without playing lottery, right?
I believe @Mirager is not talking about FIRE per say. FIRE depends a lot on expense too
Right, wasn’t talking about FIRE, because there’s also leanFIRE (which sounds crap), fatFIRE (which needs some luck through stock picking or big money gotten via equity of some sort), or coastFIRE which sounds like a more feasible/likely outcome for my situation.
I am sure the mad compounding of the last 12-13 years has skewed opinions about what’s possible, ie no lambos with VT and chill 
Off topic!
MSCI world returns since 1994 has been 6.16% per annum. These are nominal.
Let’s say inflation was 1% in Switzerland over this period.
We are about 5% real returns. That’s what we should expect if not lower (due to mean reversion)
Buying deep out of the money put options would be one solution, basically buying insurance to be protected.
Questions: Which index to choose? Is it even feasable cost wise, how often do you roll over the options (weekly, monthly..)? Maybe leveraging the portfolio to keep long exposure same as before but use the extra capital for protection?
Maybe options on the vix? A few years ago a trader turned a massive profit: The mysterious trader nicknamed '50 Cent' made $200 million last week as the market blew up
Or buy CAOS who do this for you.
So CAOS, will be an ETF for tail risk.
I will have a look.
I read the book too and what I understood was that holding the hedge fund (Empirica founded by Taleb and Spitznagel) allowed investors (I think more institutional investors) to have a higher equity exposure. They invest in undervalued or mispriced options which loose a bit of money over time but when there is a crash, their profits are much larger than the losses of previous periods. They didn’t really go into detail about the options they use and how they find them unfortunately.
Exactly. Currently I have 100% in stocks(not 100% true as I own RE + ..)
As I see bonds, gold, … not really a good options, for me in a long term. I was thinking that if I decrease the stocks to 90, 85 and do a left tail investment to secure the risk.