No. of Recommendations: 5
The more time I spend in the investing realm, the less I know.
Strong conviction picks flop while random, smaller positions seem to multiply. The more and more I try, the more I realize there is certainly not a direct correlation between effort/conviction/time and performance.
I become increasingly attractive to random stock picks. From the Malkiel Monkey studies to Mungofitchs work, I think equally weighting a batch of random stocks from a general set of stocks is a very novel way to potentially generate alpha. I think: Everyone is either stock picking or indexing, maybe there is potential in randomness?!
I had a few questions
Would random selection of QQQ (or Nasdaq top 200) work as well? a kind of Monkey meets QQQE?
Is slightly "stacking the deck" (selecting a subset of the general market: highest ROE, lowest debt, etc.) helpful or should one be a neutral as possible (pick from SP500, SP1500 or Russell 1000)
Is yearly (or 6 months or 2 year or quarterly) rebalancing an integral part of the strategy of can one mere let it run. This could potentially capture an inevitable multibagger while rebalancing could capture "sell high buy low"
How could one incorporate DCA into the strategy. As I am in working age, with frquent contributions, could one just buy a new random stock with new money?
Thanks everyone for great discussions and thoughtful analysis.
