Years ago I had an outrageous idea: What if an automated passive investment strategy can outperform an active investor?
Interestingly this is exactly what most scientific studies on investment suggest. It is well documented that most market professionals underperform the market index. The two main reasons are “excessive fees” and “emotional trading”. Both can be eliminated: “Excessive fees” by investing in cost-efficient exchange traded funds (ETFs), “emotional trading” by systematic investing. This results in greater efficiency through cost cutting and process improvement.
However the real beauty of passive investment is that I don’t have to follow the latest market gossip and don’t have to read the latest expert advice. At the end of each month I simply download the current market data, follow my investment rules and rebalance my portfolio. My dream has become true: Work less and live more!
In 2013 I hiked 2’200km from Switzerland to Spain, crossed the Atlantic on a freight ship and reached Cuba by post boat. In 2015 I drove 90’000 km in my VW camper around the Americas from tierra del fuego to Aaska and Cape north in Norway. In Cuba I “worked” as a photographer for the most famous Salsa orchesters of the world.
My investment office has 4 square meters of space, 4 wheels and an ever changing view of the beauties of the world. More on my travelling on www.plan–b.ch .
At the end of each month I adapt the actual portfolio weights to the theoretical weights:
- Before the market opens I launch my excel spreadsheet that calculated the new investment weights.
- I press the button “generate orders”.
- I import my orders with a single click into the Interactive Brokers (IB) trading platform. My orders are now placed for automated execution.
- IB executes all orders and informs me by email. I check the execution.
I start my work day usually with a big latte macchiato and by the time I finish it, work is normally done. Cost of a workday is the price of my latte macchiato. The download of historical data from yahoo is free.