Investing

I have recently started thinking about investment strategies.  My current investments are based on a strategy that I came up with many years ago before I understood religion or much of how the world really works.  With my current understanding, can I do better?

I developed my old strategy by reading many books and generally researching investments, and then choosing what I thought made sense.  The result was not horrible but not great.  It was somewhat below average.  I think most other non-professional investors do the same, with the same results.

Of course the very rich do things differently.  They are generally sociopaths who are well connected and manipulate people or use inside information to get an advantage over the rest of us.  So they do well, but this isn't a strategy for the average investor.

After thinking about this problem for a few days, last night I just couldn't sleep and kept tossing and turning.  This morning I woke up with an answer.  My answer is based on my understanding of religion which I have applied in many areas of my life.  The key point is not to let arrogance cause bad decisions.  Truth only comes from God which means from the real word which means from empirical data.  Everything one reads about investing is just someone's opinion, comparable to an idol, with no basis in reality.  What no one does, and what I plan to do, is to choose an investment strategy purely based on empirical data.  No speculation at all.

The idea is to test investment strategies against historical data.  So each investment strategy must be a simple algorithm (formula) that I can implement in software.  Then I need to get the relevant historical data to test the algorithm.  The test must take all factors into account, factors that are often ignored.  This would include things like dividends, taxes, mutual fund expenses, etc.  With all this in place, I would test all plausible strategies and then just choose whichever one performs best.

This is simple in theory but I think it will require some effort to implement properly.  As a programmer, I will write the code and I will make it open source.  I could use help finding the data, getting all the factors right, and coming up with investment strategies.  But in my experience, humanity is generally useless, so I don't expect any help regardless of how useful this project would be.  But if anyone is interested in this, they can contact me.

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If you believe in inductive reasoning then the past is useful from predicting the future.  A key is to test many different past time periods because just one time period isn't enough to judge.  So one can test against times of inflation or depression or whatever conditions one worries about.  A good strategy should do okay under all conditions.

It is true that there is currently a fundamental change happening.  Humanity is going insane and the world will become much poorer as a result.  But it is the poor (and former middle class) who will suffer from this, not the rich.  The investments of the rich should do fine while the poor starve, so this shouldn't really have much effect on investment strategies.

If this has been tried in the past and failed, please give a reference.  I haven't seen anything like this.

This is a good idea but the problem is the APIs for getting historical earnings data only work for a brief period of time before the fickle software developers change it or take it offline. I find that this is by far the biggest obstacle to writing financial software.

I will say though that a few years ago I wrote a simple script for valuing stocks using basically just the PE ratio with net assets factored in, and this resulted in me buying a stock that has more than doubled in value since I bought it in 2020. So I do think that it is possible to write software that beats the market without being a scholar of finance.

Cryptocurrencies as an investment object
Cryptocurrency is defined as the money of the future or a 21st-century unicorn as some may joke. It has become a global phenomenon while being misunderstood by majority of financial institutions, governments and companies which are still working according to old standards. However, many of people working there have heard about virtual currencies such as Bitcoin which confused the society with its innovative approach to handling money flow in a form of digital cash.

The most popular cryptocurrencies of today
The most popular cryptocurrencies nowadays are: Bitcoin (market cap $11, 382, 240, 050), Ethereum (market cap $904,848,975), Ripple (market cap $290,446,848), Litecoin (market cap $184,904,214), Monero (market cap $83,466,495), Ethereum Classic (market cap $80, 817, 441), Dash (market cap $66, 519, 213), Augur (market cap $52, 038, 360), NEM (market cap $37, 322, 550), Waves (market cap $35, 727, 500).

Bitcoin
Is the first such currency which serves as a digital gold standard in the whole industry. Its price has increased from 0 to more than $650, while their transaction volume reached more than 200 thousand daily transactions.

Litecoin
While Bitcoin is referred to as a digital gold, this cryptocurrency is referred to as digital silver. It has an updated algorithm, is even faster and has a larger amount of token than the Bitcoin. However, it is still called „a smaller brother of of bitcoin”.

Ethereum
Is very flexible family of cryptocurrencies as it validates a set of accounts, balances and states as well being able to process complex programs and contracts.

Monero
This cryptocurrency raised a lot of awareness when its popularity peaked in Summer 2016. It happened for the reason of darknetmarkets deciding not to accept it as a currency. The consequences were its price increase and a decrease of its actual usage.

Ripple
Has a bigger tendency to process IOUs than to be a cryptocurrency, it doesn’t serve as a medium to store and exchange value while having a XRP as a store of value. It is more like a token to protect the network about spam. However, such financial institutions as banks can use them and are using today as well on a daily basis.