With Thanksgiving just behind us, it’s a good time to stop and count your blessings. Mathematically-optimized stock portfolios couldn’t have existed at any previous point in history and we, along with our users, have a lot to be thankful for. So in the spirit of Thanksgiving, we’d like to take some time to show our gratitude for some of the things that make stock market investment better than it’s ever been:
The Great Indoors
If you read our last blog post, you may have noticed that the two of the largest US stock exchanges both started outside on the pavement. Legend has it that the Buttonwood Agreement, which eventually formed the basis for the NYSE, was called that because it was signed under a buttonwood tree. Meanwhile, NYSE American was known as the Curb Exchange before it became AMEX. As you may guess, the entire exchange was out on the curb on New York’s Broad Street.
Over the years, brokers have moved from shouting over traffic to shouting over each other under a good sturdy roof. Bad weather can no longer close the stock market. In fact, a lot has changed over the years. Various forms of electronic trading have been integrated, regulations have been implemented, and women can now participate.
Nobel Prize Winners
Specifically, we’re grateful for Harry Markowitz, who won the 1990 Nobel Prize in Economics for his earlier work on Modern Portfolio Theory (MPT). MPT states that the potential risk and return of any one stock needs to be analyzed as part of a bigger picture. Assessing individual stocks is fine but it has more value when we look at how stocks complement each other as part of a portfolio. This is the basis for Cherries’ optimized stock portfolios. We analyze individual stocks in order to build portfolios that make the most of stock diversity.
Time Travel
Of course, we only mean metaphorical time travel here. Cherries backtesting feature is equipped with data from the past (starting in April 2017) and lets you simulate the results of any given portfolio. So let’s say you create a portfolio but aren’t quite convinced that it’s stable. You can pretend that it was created a year ago and see how it would have withstood the ups and downs of the last twelve months. If you’ve ever wanted to travel back in time to find out “what if?”, this may be the closest you’ll get. Although if anyone out there does invent a time machine, please let us know.
Do-Overs
Thought you left behind do-overs when you finished elementary school? Think again. Cherries is a 100% virtual portfolio builder. That means that you don’t have to create just one stock portfolio, even if your investment funds are limited. Create one, try it out and then create another. This lets you test different strategies, experiment with risk levels, and find your own investing style before you actually commit to any one portfolio.
You
At Cherries, one of the things we’re most grateful for is you. Cherries users include people who are just getting to know the stock market and experienced traders who are trying out sophisticated new strategies. We’ve got people who invest thousands in their optimized portfolios and people who still haven’t invested a penny. But all of them are interested in the mathematics of smart investing. And we appreciate that.