WHY YOU CAN’T BEAT THE MARKET

It’s SIMPLE really. It’s been written about and explained by many brilliant minds like Nassem Taleb where he explained in his books like “ANTIFRAGILE” and Taylor Pearson who explained the concept of WHY you cannot beat the market in an article, “A Big Little Idea Called Ergodicity”.

Simply put, the problem with beating the market is that there are any number of things that can cause you to alter or abandon your proposed investment choice. “If [an} investor has to eventually reduce his or her exposure because of losses, or margin calls, or because of retirement, or because a loved one got sick and needed an expensive treatment, the investor’s returns will be divorced from those of the market.”

Pretty simple … IT DEPENDS ON LUCK, and your ability to “Stay In The Game”

 Vladimir Lenin put it “There are decades in which nothing happens and weeks in which decades happen.” Saying you’ll “Stay in the Game” when everything is normal, or boring, or expected, is really EASY.

Everyone expects to stay the course, because everyone expects things to be NORMAL!

“This is why examples such as ‘If you had bought Amazon stock in 1999 and held it for 20 years, you would have done great even” ARE DUMB.

From 1999, the price of the stock collapsed by over 90%.

The type of person that bought a bunch of Amazon stock in 1999 probably also bought a bunch of other crap stocks and had a job in tech. In 2001, they had to sell everything to make rent.’”

Warren Buffett said that, literally, anyone who survived in the risk taking business has a version of “in order to succeed, you must first survive.” Nassem Taleb has written in “The Logic of Risk Taking” that, “My own version has been: “never cross a river if it is on average four feet deep.” "I effectively organized my life around the point that sequence matters and the presence of ruin does not allow cost-benefit analyses.”

He and his partner, Mark Spitznagel, created Universa Investments to, “help investors eliminate “uncle points” so they can get the returns of the market.”

My experience and findings have mirrored their findings but strangely,

Smart Structure comes at the same point with a solution that is literally 180 degrees opposite of Universa.

(So NO ONE CAN SAY I COPIED THEM).

I’ll tell you the truth, they got to the right church,

got almost to the right pew, but they STILL have a hole in their model ….

their ability “TO STAY IN THE GAME”.

I can explain it simply: Their solution “Universa and Empirica followed the Black swan theory which was about unexpected extreme events that have significant impact on the world and the financial market”. Now Mark Spitznagel’s book “Safe Haven” is excellent, I recommend anyone with an interest read it, but I caution everyone that the book is, in and of itself, 100% AT ODDS with Mr. Taleb’s initial comments regarding “Staying in the Game”! Universa’s process was explained as making a series of small “Asymmetric Bets” that cost little but have an enormous payout SHOULD they PAY OFF. What if they don’t pay off for 1 year … 3 years … 10 years … will people STILL stick to their model? Will the returns, if realized be greater than the “Sunk Cost” of their bets?

The obvious potential flaw in this ointment is the same exact issue that affected LTCM when THEY BLEW UP in 1997. THEY COULDN’T STAY LIQUID LONG ENOUGH TO RIDE OUT THE STORM. Their logic and trades were correct, but leverage AND TIME did them in.

(FYI: The ULTIMATE BLACK SWAN EVENT - in MY opinion - is that there is NO FUTURE BLACK SWAN EVENT. It COULD happen - I doubt it will happen, however if there were no more, It would RUIN Universa’s returns, yet it would have ZERO AFFECT on Smart Structure’s Model.

Smart Structure Models works as designed in GOOD and BAD markets

it ENABLES you to BE GREEDY when EVERYONE ELSE IS FEARFUL

YOU WON’T FEAR WHAT YOU ARE PREPARED FOR!

SO GET SMART and check out how our Smart Structure Models

enable EVERY INVESTOR to create THEIR SPECIFIC SOLUTION to ENSURE they can “Stay In The Game”