Pinterest financial statements

Published: 15 August 2022| Version 1 | DOI: 10.17632/jggcgy93x8.1
Contributor:
Tuan Do

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This article will explain what advantages retail investors have over high salaried investment managers and institutions and why Warren Buffets bet that any investment manager cannot outperform the SNP500 was free money. Rebalancing Take a simple example of 2 companies: Apple and IBM. Over the last 5 years Apple is up almost 5x while IBM has done practically nothing. Had you started with a portfolio equally weighted with both companies 5 years ago and rebalanced monthly you would have to sell/Trim Apple regularly and use the funds to purchase additional IBM stock. Now scale that up to 10, or 100 companies. Over the long run most will go up, some will go down and a select few will explode upwards. With rigid rules like “no company can represent more than 3% of the portfolio. As one company goes parabolic (AMD, NVDA, Apple, Tesla etc..) if you let it ride it will ultimately represent 10%+ of the portfolio. however with rebalancing you are taking from the winners and giving to the losers, in many cases stocks that have no business in any portfolio. Bond Allocation Disclosure: I work in the insurance industry as an actuary creating insurance policies, most of the policies are hedged by bonds (we buy in billions). However the value and total return of a bond index actually does better in a decreasing interest rate environment than a rising one. Older bonds yielding 4-10% have multiplied in value as interest rates have decreased since 1982, the last 38 years. Just for some context the interest / bond yield was 15% in 1982, and has decreased to almost 0% today. Over the last 38 years bonds h… Older bonds yielding 4-10% have multiplied in value as interest rates have decreased since 1982, the last 38 years. Just for some context the interest / bond yield was 15% in 1982, and has decreased to almost 0% today. Over the last 38 years bonds have done very well, however investing them today is like looking in the rear view mirror to drive forward, this performance will not be repeated unless we get into negatives as shown above.Source : I made this As seen above any portfolio containing bonds since 1982 has delivered what seems to be risk free excess returns. However now that we are at the end of the cycle, the famous 60/40 Stock/Bond or 50/50 etc.. will all significantly underperform historic…

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