Skewness Issue

It is frequently said in the markets, Bad trades catch up with you.

Mathematicians of probability give that a fancy name: ergodicity. It means, roughly, that (under certain conditions), very long sample paths would end up resembling each other.

There is no rational reason to keep a painting you would not buy at its current market rate.

Quality of a decision cannot be solely judged based on its outcome.

The epic poet (Homer) did not judge his heroes by the result: heroes won and lost battles in a manner that was totally independent of their own valor; their fate depended upon totally external forces, generally the explicit...

The notion of path, as opposed to outcome, indicates that it is not a mere MBA-style scenario analysis, but the examination of a sequence of scenarios along the course of time.

We are not concerned with what the investor's worth would be i...

A negative pang is not offset by a positive one (some behavioral economists estimate the negative effect to be up to 2.5 the magnitude of a positive one). It leads to an emotional deficit.

Over a short time increment, one observes the variability of the portfolio (variance), not the returns. Our emotions are not designed to understand the point. We think with our emotions and there is no way around it.

It serves better to check portfolios at sufficiently large intervals t...

I can use data to disprove a proposition, never to prove one. I can use history to refute a conjecture, never to affirm it.

There are only two types of theories

1. Theories that are known to be wrong, as they were tested and adequately rejected.