Blog 1: A New Chapter in Active Investing
Hello everyone,
For the past ten years, this website has focused on helping investors apply foundational finance concepts to real-world scenarios—often with the humble spreadsheet as our tool of choice. That mission continues, time permitting. But today, I’m opening a new chapter: a dedicated blog section to explore active investment strategies that I believe deserve closer attention.
I’ve always believed in backing up ideas with action. So, alongside discussing strategies, I’ll be sharing actual trades and analyzing the resulting profit and loss. Before diving into the market, though, I want to lay out my framework in writing. It’s a way to clarify my thinking—and hopefully sidestep some of the behavioral biases that trip up even seasoned investors.
Now, I realize this direction runs counter to the prevailing wisdom in many well-established financial blogs. The dominant narrative tends to favor passive investing: stay the course, dollar-cost average (though I personally lean toward value averaging), and invest with a long-term horizon. That’s solid advice. But the only way to accelerate wealth accumulation under that model is to invest more—which often means spending less. Taken to the extreme, it can feel like financial asceticism. I’m exaggerating, of course, but some investors do seem to veer in that direction.
This blog takes a different stance: advocating for active management of a portion of your portfolio. Why? Because I believe there are compelling reasons to challenge the status quo. Consider the concentration risk in U.S. markets—roughly 40% of every dollar invested in the S&P 500 ends up in just ten stocks. Yes, their earnings growth may justify it, but such a heavy weighting raises questions. A little contrarian thinking might not hurt in this stage of the cycle.
There’s also the issue of relative wealth. If you, me and everyone around us are investing passively, it’s unlikely we’ll outperform our peers. With ETFs now ubiquitous and broker fees at historic lows, passive investing has become the default. Yet some investors are probably stretching ETFs beyond their intended use, and the rise of active ETFs blurs the line between indexing and active management.
To be clear, this blog won’t focus on traditional stock picking or deep fundamental analysis—at least not in the conventional sense. While we’ll take positions in instruments tied to individual stocks, I won’t be trying to forecast earnings or calculate intrinsic value.
Instead, I’ll be diving into strategies that involve derivatives on U.S. equities. There are many reasons why this area fascinates me, and I’ll unpack those in the next couple of posts. For now, I’ll say this: I’ve occasionally traded options, and I want to improve my decision-making process. Writing down my ideas and being able to revisit them is an important reason for starting this active investing blog.
Let’s see where this journey takes us.