Closing The Casino In Your Portfolio

May 13, 2021

[Join us for a free webinar, Thursday, May 20, at 2 p.m. ET: Investing, Gambling & Gamification: New Market Dynamics Demand New Portfolio Risk Metrics.]

Am I gambling or investing?

That’s a reasonable question you should always be asking yourself. Other important questions include: What’s my motive? What are my goals and time horizon? That’s what good investing due diligence is all about, and it should all take place before you pull the buy trigger.

What’s more, investing doesn’t happen in a vacuum—where it’s about you and only you. Markets are a big sandbox filled with all sorts of players, and their actions directly impact your experience in that space as well.

Take for instance the gamification and gaming tone the market has been sucked into with a wave of retail investors, speculators and professional day traders using the GameStops, AMC Theaters and even silver as a ticket to quick riches with a sense of activism against Wall Street.

It’s easy to get caught up in the hype, but under all the noise, this is just crowd-sourced pump-and-dump schemes that do produce winners, but leave a long trail of losers in their dust.  

The gamification of the markets enabled by easy digital access to markets, zero commissions, the fear of missing out (FOMO, boomer) and reddit-fueled waves of trading are not going away. Quite the opposite.

We are more likely to see these trends remain as a market mainstay, creating pricing distortions and market turmoil. This may very well be the new normal; so you, responsible investor, may have to adapt.

Hot & Dumb Money Waves

The good news is that there’s help available to navigate the impact of “hot” and “dumb” money for portfolios. Due diligence is a key step in that process, but it can fall short when it comes to mitigating gambling risk to your investment outcome.

We’d like to offer some help in this area. On Thursday, May 20, I invite you to join me for a free webinar, Investing, Gambling & Gamification: New Market Dynamics Demand New Portfolio Risk Metrics. I will be joined by Julian Koski, co-founder and chief investment officer, and Andy Kern, senior portfolio manager, New Age Alpha.

We will dive into questions around investing, gambling and gamification:

  • Are you an investor or a gambler?
  • Do you think in terms of avoiding losers?
  • Are you forecasting the future, or do use probabilities?
  • What risk does the “Human Factor” identify?

 

In our conversation, we’ll break down the additive value that simply avoiding losing stocks can have in your overall portfolio. We are often obsessed with chasing the winners, and we miss the bigger picture.

We will also demonstrate New Age Alpha’s online “Avoiders” tool to help you avoid the losers and expose your portfolios to a unique source of alpha, an actuarial approach with an uncorrelated source of return.

Join us.

(Sign up here for Investing, Gambling & Gamification: New Market Dynamics Demand New Portfolio Risk Metrics.)

Drew Voros can be reached at [email protected]

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