RESOURCES

As we turned the calendar to 2024, it was 48% above its 50-year average and 21% above is average over the last 20 years, up from 35% and 11%, respectively a year ago. This trails only 1929, 1999-2000 and 2021 for the highest valuation in history.

“If you’re serious about 10x, then freedom is the language and operating system that will get you there. Your own freedom as well as the freedom of everyone else who joins you on your 10x adventure.”

I’ve coined the term Investing 3.0 for an approach to investing that is newer than the other two, and which I believe solves the problems inherent in both Investing 1.0 and Investing 2.0. Investing 3.0 is quantitative investing. It is also called rules-based investing, factor-based investing and evidence-based investing. Some have coined factor-based investing “smart beta” because it gives exposure to something other than the full market. It acknowledges the difficulty of using skill to find stocks that will outperform and instead relies on a basket of stocks to average out the performance of each. It reduces the cost and emotional pitfalls associated with using human research and management teams to select stocks. It also seeks to not only avoid the excesses of popular beliefs, but to systematically capitalize on these excesses. Investing 3.0 focuses on systems rather than opinions. It learns from behavioral finance theory where opportunities should exist and then analyzes data to test rules for capturing those opportunities. These rules are then followed mechanically, with the understanding that sometimes the crowd is right, but on average, the rules win. The cost of rules-based funds generally falls somewhere between those of index funds and actively managed funds.

Start the year off right by getting started on these five top financial goals.