Why we focus on index ETF?

1. Inflation

We believe that world economic growth is unstoppable. 20 years later, the price of Coca-Cola will be higher than the present.

Deflation is harmful, but a suitable inflation rate can stimulate the economy. Central banks will remain inflation rate% positive when deflation is likely to happen (economic recession).

2. Diversification

A good portfolio construction can reduce overfitting and portfolio volatility so that the Sharpe ratio can be increased.

3. Higher market liquidity

Higher liquidity means lower volatility. It helps us to execute a better price.

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1929 Market Crash Cause

Many people believe in the reason why the market value of all share listed in NYSE fell by 30% is that there was an economic bubble and the stock market is irrational. However, is that the truth? We are going to show you three different approaches to the 1929 market crash. Remember that correlation is not causation. These are just references. Approaches: 1. There was no economic bubble before the 1929 market crash. Irving Fisher, a famous US economist said: “prices of stocks are low.” Fisher based his projection on strong earnings reports, fewer industrial disputes, and evidence of high investment in R&D and other intangible capital. 2. There was insider trading. In the months prior to the stock market crash of 1929, the price of a seat on the NYSE was abnormally low. Rising stock prices and volume should have driven up seat prices during the boom of 1929; instead, there were negative cumulative abnormal returns to seats of approximately 20% in the months before the market crash. A...

Deflated Sharpe Ratio can reduce false discovery

Introduction With the recent advent of large financial datasets, machine learning, and high-performance computing, analysts can backtest millions of alternative investment strategies. Backtest optimizers search for combinations of parameters to maximize a strategy's simulated historical performance, leading to backtest overfitting. The performance inflation problem goes beyond backtesting. More generally, researchers and investment managers tend to report only positive results, a phenomenon is known as selection bias. Failure to control the number of tests involved in a given finding can lead to overly optimistic performance expectations. The Deflated Sharpe Ratio (DSR) corrects for two major sources of performance inflation: selection bias under multiple tests and non-normally distributed returns . By doing so, DSR helps separate legitimate empirical results from statistical deception. Backtesting is a good example. Backtesting is a historical simulation of how a particular inv...

Research Disclaimer

This material has been provided to you solely for information purposes and does not constitute an offer or solicitation of an offer or any advice or recommendation to purchase any securities or other financial instruments and may not be construed as such. The factual information set forth herein has been obtained or derived from sources believed by the author and Matroid Evolved (“ME”) to be reliable but it is not necessarily all-inclusive and is not guaranteed as to its accuracy and is not to be regarded as a representation or warranty, express or implied, as to the information’s accuracy or completeness, nor should the attached information serve as the basis of any investment decision. The information set forth herein has been provided to you as secondary information and should not be the primary source for any investment or allocation decision. Past performance is not a guarantee of future performance. This document is not research and should not be treated as research. This documen...

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