RIAengine

I've been working hard on making the tools better, in particular on the optimizer, to make sure it produces great results. Keep in mind that studies that use historical returns can only be relied on so much. And we should never be using historical results to tweak the portfolio, because it leads to overfitting. If you are not aware, overfitting is a data science term...

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Machine learning can be used in investing in a variety of ways. This article seeks to show a few of those and describe the basics. Hedge funds have tried for years to use machine learning (or AI) in their funds. Moving on to today, all quantitative funds use some form of machine learning. Some hedge funds even build around machine learning specifically, spurning human intervention. Risk Management Risk...

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In Forbes I found a post about some 'expert' model portfolios. I thought it would be interesting to try optimizing these portfolios using RIAengine smart portfolio optimizer, and seeing what backtests looked like. Here are the results. Buffet 90/10 Portfolio The first portfolio is simple, just 90% allocation to an S&P500 index fund (I chose SPY) and a 10% allocation to Bonds, I used SHY. Here is...

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High quality data is important for a company building investment apps. That's why we're excited to announce that we will soon have a deal with Morningstar, one of the leaders in stock market data. RIAengine uses data to analyze investment portfolios. We use this analysis to help you come up with better portfolios. RIAengine will be launching the smart portfolio optimizer soon to a small beta...

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Investment portfolio risk can be an uncomfortable topic. It’s easy to find articles all over the internet that encourage people to sit tight when things are dropping. Warren Buffet’s famous instructions regarding his wife’s trust are to put 90% of it in the S&P500. And since Warren Buffet says to do it, a lot of people think we should all do the same. (side note, with...

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Prominent asset manager Mary Meeker once said her primary goal is limiting drawdowns! While most portfolio construction is explicitly or implicitly focused on returns, she knew that minimizing events that can decimate the portfolio is more important for long term gains than trying to maximize growth periods. Famously, a portfolio needs to double to make up for a 50% drawdown. So how to minimize drawdowns? Portfolio diversification...

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The first time I heard the term ‘Artificial Intelligence’ was in the 1980s, when my dad worked for Digital Equipment Corporation, in the Silicon Valley of the East (Massachusetts). And yes they made computer chips from Silicon. In the 80’s Artificial Intelligence referred to, basically, complex logical structures, with each decision leading to a tree of subsequent possibilities. It’s all compute power allowed in the...

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Recently I saw an article about Monte Carlo Analysis, which (as you know) is a way to evaluate a person’s ability to meet their future income needs. Using a portfolio of securities or asset allocations it runs through as many rolling periods as available in the data, to come up with a probability of meeting future income needs. Certainly Monte Carlo Analysis is not great with...

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It's commonly known in the industry that passive investing keeps growing and active investing is under pressure from all sides. First there are fees. For a decade or more, books have been written about the impact of fees on portfolios. The late John Bogle was one of the pioneers and thought leaders here. Second, performance reports showing passive funds beating active managers hit the investment...

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