A brief summary on the last article. The question I asked: Given only the investment choices of SPY and cash, what is the optimal strategy to grow the bankroll? I provided a table of the SPY statistics on various rebalancing schedules (here). For readers who have a better investment strategy than SPY indexing (for example, value investing, dividend growth investing, small stock investing etc.), feel free to replace SPY with your own, and invest more if your betting statistics are more

]]>In my last article, I posted the question whether it is prudent for a high risk-tolerant investor to invest all in one strategy. The Kelly formula suggests that it is not a good idea. The reason "I can afford to lose all" does not give me the license that "I should invest all". In this article, I'd like to elaborate on two more points in this framework.

A brief summary on the last article. The question I asked: Given only the investment choices of SPY and cash, what is the optimal strategy to grow the bankroll? I provided a table of the SPY statistics on various rebalancing schedules (here). For readers who have a better investment strategy than SPY indexing (for example, value investing, dividend growth investing, small stock investing etc.), feel free to replace SPY with your own, and invest more if your betting statistics are more

Complete Story »]]>

The answer is simple. If I take any risk assessment questionnaire, my risk tolerance level will be off-the-charts, so I should be 100% in S&P. Easy, right?

Not so fast. First, Mr. Market really doesn't care who I am and what I care; he has

]]>First, let me introduce myself. I am a middle-aged guy who has a stable job, a good income, and am not financially stressed. I have thirty more years of working life before retirement. Through my work, I have a self-directed 410K account. In addition, I have been a part time trader for many years and mostly trade options. "Risk" is virtually my middle name. Now, I am facing a simple asset allocation question for my 410K account. If I have been given the opportunity to either invest in S&P 500 ETF (NYSEARCA:SPY) or in cash, what should be my ratio for these two asset classes?

The answer is simple. If I take any risk assessment questionnaire, my risk tolerance level will be off-the-charts, so I should be 100% in S&P. Easy, right?

Not so fast. First, Mr. Market really doesn't care who I am and what I care; he has

Complete Story »]]>