US Investor Index

How do you compare against the average US investor?

slides.com/qplum/us-investor-index

Disclosures: qplum LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

What we will cover today

Importance of a benchmark

Wrong benchmarks that we use today

What would be the right benchmark?

Data used in construction of the index

Current risk and allocation of US investors

Creation of qplum's US investor index

Comparing US investor index to hedge funds

Trading strategy on investor behavior

What we will not cover today

Importance of the right benchmark

• Helps us compare (fairly)
   
• Helps us decide what to do

Incorrect benchmarks

... compare the returns for your current portfolio to the benchmark for the class of investments you're considering - Finra.org

Data Used in construction of US Investor Index

Sources:

Federal Reserve US Household balance sheet

BLS data on retirement allocations

Data:

• Balance sheet allocations to each sector
• Inflow / outflow in each sector

Example of data available

Asset allocation of US investors

In depth look into allocation changes

Questions so far?

Creation of qplum's US investor index

On every update to the balance sheet of US investors published by the Federal Reserve:

1. Update the current allocation
2. Compute the realized returns of the previous quarter
3. Adjust the previous estimate of the period

Performance of qplum's US investor index

Investors panic at 5% drop in wealth

References

Here’s proof the average U.S. household isn’t the ‘dumb money' - Marketwatch

The Real Dumb Money: Retail Investors Have Outperformed Hedge Funds By 300%​ - Zerohedge

... compare the returns for your current portfolio to the benchmark for the class of investments you're considering - Finra

US investors better than "smart money"

Trading strategy based on US investor allocations

(Backtested) Gains of investing one dollar in each of these strategies

These backtested results are for illustrative purposes only. Backtested performance is not indicative of future results. The actual performance for investments in these strategies could be different.​

Towards a science of investing

In future, we should be investing with a trustworthy tool and not experts.

 

The tool should look at every aspect of the data.

The tool should be affordable and efficient.

The tool should know what we have learned already."

- Benjamin Graham

Questions?​

gchak@qplum.co

Disclosures: qplum LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.