Posted by fschmidt on
URL: https://mikraite.arkian.net/Investing-tp2085.html

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.