Featured and Latest Posts
Understanding Key Financial Ratios in Modern Portfolio Theory
Investing is about more than just chasing returns—it’s about understanding the risks that you’re taking to get them. Financial ratios grounded in Modern Portfolio Theory (MPT) help investors evaluate performance in a structured way, accounting for both total volatility and market sensitivity.
From standard deviation and beta—which capture different types of risk—to the Sharpe ratio, alpha, and the information ratio—which assess how efficiently returns are earned—these metrics offer powerful insights into the true quality of an investment.
Used together, they don’t just measure performance, they help investors make better, more informed decisions.
Does Gold Deserve a Place in Your Portfolio?
Gold has captivated human societies for millennia, from Roman coins to central bank vaults. Today, it’s often seen as a safe haven or inflation hedge—but how does it actually stack up as a long-term investment?
This post examines gold’s track record across nearly a century, comparing its returns, volatility, and portfolio role to equities, bonds, property, and cash. The evidence shows that whilst gold preserves purchasing power and shines in crises, it lacks the income and compounding power of productive assets. Still, with low correlation and strong performance during market stress, gold can play a valuable diversifying role—particularly when used strategically alongside stocks and bonds.
Factor Investing in Fixed Income
Factor investing is widely used in equities, but its application in fixed income remains overlooked. Yet decades of research show that bond returns are shaped by two persistent, compensated risks: term and credit. These represent the extra return for holding longer-term or lower-rated bonds, respectively.
Crucially, these premia can accrue even when yields fall. They are realised through mechanisms like roll-down, spread compression, and carry, not by betting on the direction of interest rates.
This post explores how fixed income factor investing works, how firms like Dimensional apply it in practice, and why traditional market cap-weighted bond indices often work against investors seeking higher expected returns.
What Does a Good Financial Decision Look Like?
Good financial decisions aren’t about predicting the future—they’re about following a sound process today.
In investing, outcomes are noisy. Short-term performance often reflects randomness, not skill. Yet fund managers continue to pitch five-year track records as if they prove anything. They don’t.
As Ken French puts it, a five-year chart ‘tells you nothing’. The real skill lies in filtering out the noise—evaluating strategy, incentives, costs, and behavioural fit.
Don’t chase what worked recently. Stick with what works reliably.
Good financial decisions aren’t about predicting the future—they’re about following a sound process today.
In investing, outcomes are noisy. Short-term performance often reflects randomness, not skill. Yet fund managers continue to pitch five-year track records as if they prove anything. They don’t.
As Ken French puts it, a five-year chart ‘tells you nothing’. The real skill lies in filtering out the noise—evaluating strategy, incentives, costs, and behavioural fit.
Don’t chase what worked recently. Stick with what works reliably.