Chapter O Introduction to Metabraid
Over the last several years, I have developed an investment methodology for investing in mutual funds, including open-end mutual funds, closed-end mutual funds, and ETF (exchange-traded funds). This method is to invest in a wide collections of mutual funds to achieve an overall return which is very close to the average market return with a reduced risk level.
The original idea came from reading a financial book about the investment frontier curve. In this curve, the investment return and investment risk are inversely related to each other. The higher return is usually associated with higher risks. I was thinking about to take the advantage of asset classes with different risks by combing in one portfolio with all the available asset classes.
Later I discovered that this methodolgoy of combing many different asset classes into one portfolio had been used by institutional investors to manage their large assets already. By combing asset classes with different risks and different correlation coefficients, one can create a portofolio which can stand all the girations of each classes of assets but with a stable asset value for the overall asset.
I call this kind of investing method as metabraid. I have learned the word braid from three occations. One is that some women braid their hairs as braids. This kind of braid is for women to be beautiful. Another one is to make three or more strends of ropes into one braid. This kind of braid is for the ropes to be strong. Another kind of braid is the stream braid. In large rivers, the stream channels sometimes can be divided in to three or more branches. This kind of branched river channel is called braided river. However, since each branch channels are not stable, they change all the time depending on the supply of water and sediment from the upstream. The braid used here for the river is to be dynamic. In summary, braids are strong, beautiful, and dynamic.
Meta as a prefix means after or beyond such as in Metaphysics, Metadata, Metaprogramming. I use meta in metabraid in similar ways.
The original idea came from reading a financial book about the investment frontier curve. In this curve, the investment return and investment risk are inversely related to each other. The higher return is usually associated with higher risks. I was thinking about to take the advantage of asset classes with different risks by combing in one portfolio with all the available asset classes.
Later I discovered that this methodolgoy of combing many different asset classes into one portfolio had been used by institutional investors to manage their large assets already. By combing asset classes with different risks and different correlation coefficients, one can create a portofolio which can stand all the girations of each classes of assets but with a stable asset value for the overall asset.
I call this kind of investing method as metabraid. I have learned the word braid from three occations. One is that some women braid their hairs as braids. This kind of braid is for women to be beautiful. Another one is to make three or more strends of ropes into one braid. This kind of braid is for the ropes to be strong. Another kind of braid is the stream braid. In large rivers, the stream channels sometimes can be divided in to three or more branches. This kind of branched river channel is called braided river. However, since each branch channels are not stable, they change all the time depending on the supply of water and sediment from the upstream. The braid used here for the river is to be dynamic. In summary, braids are strong, beautiful, and dynamic.
Meta as a prefix means after or beyond such as in Metaphysics, Metadata, Metaprogramming. I use meta in metabraid in similar ways.
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