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Asymmetric Investment Returns

Asymmetric Investment Returns is a blog authored by Mike Shell since 2006, covering topics about asymmetric investing and trading for asymmetric risk/reward in pursuit of asymmetry.

Why Size Doesn’t Guarantee Survival: Understanding the Lifecycle of Large Companies in a Disruptive Market

July 3, 2024

The longevity of large, established companies can often be overestimated due to a natural lifecycle many organizations follow, similar to the product lifecycle. Large companies that have enjoyed decades of success and market dominance can become more vulnerable as they grow because of inertia, structural complexity, and resistance to change—factors that can make them slow to adapt to evolving technologies, market demands, or shifts in consumer behavior.

Fed Policy is Contributing to a Surge in Debt Payments

June 29, 2024

With the Fed holding rates at 23-year highs as part of its restrictive policy stance, the US Treasury has had to issue more debt to fund government expenditures. The higher the US’s coupon payments become, the greater barrier it presents to economic growth and stimulating government spending.

How is the Scientific Method used for Investment Management?

June 19, 2024

The scientific method is a systematic process used to gather knowledge and test hypotheses through observation, experimentation, and analysis. In investment portfolio management, the scientific method can be applied to improve decision-making, manage risk, and enhance returns.

Resting on One's Laurels: Definition, Consequences, and Strategies to Avoid It

June 10, 2024

Becoming complacent and basking in past success is a problem for active investment managers, driven by constant discussions of past performance. Every new potential investor primarily asks what we've done in the past, when they should instead focus on how we did it, and if the strategies, tactics, and performances seem likely to repeat in the future.

Is the U.S. Stock Market Overvalued?

June 9, 2024

Is the stock market overvalued or undervalued? If it's overvalued, and we want asymmetric investment returns through asymmetric risk/reward to manage or mitigate market risks, we must instead focus on the direction of the price trends to determine our exit early in the stage of downtrends and/or asymmetric hedging.

Is Luck a Big Factor in Success?

May 28, 2024

The role of luck in success is a subject of considerable debate among scholars, entrepreneurs, and investors. While success is often attributed to hard work, talent, and perseverance, there is growing recognition of the role that luck can play. Here are several perspectives on how luck intersects with success