Muscular Investing

Brian Livingston
About the author: is the author of Muscular Portfolios (2018), which reveals the 21st century's best-performing long-term trading strategies, and editor of the free Muscular Portfolios Newsletter. He is also the coauthor of 11 Windows Secrets books (1991-2007). He has been assistant IT manager of UBS Securities, a consultant to Morgan Guaranty Trust (now JPMorgan Chase), and technology adviser to Lazard Ltd., all in New York City. His columns appear in the Muscular Investing blog most Tuesday and Thursday mornings. Learn More

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Muscular Investing

The Coffeehouse Portfolio Does Well with a Momentum Twist

by Brian Livingston

The Coffeehouse Portfolio is so named not because you buy Starbucks, but because the strategy is so simple you could set it up in a coffee shop. • The formula holds seven assets at all times, with 40% in US stocks, 20% in REITs and non-US stocks, and 40% in bonds. The portfolio improves its gains if you add a simple Momentum Rule, but there’s a little surprise in the results. Figure 1. The Coffeehouse Portfolio, like most so-called Lazy Portfolios, is designed to be so simple that you could set it up while having a cup of coffee in a café. Photo by Dabchai Read More 

Muscular Investing

The Nano Portfolio is Basic But Has an Easy Path to Improvement

by Brian Livingston

The Nano Portfolio includes a significant exposure to global stocks, which is a healthy reminder that we shouldn’t put all our eggs in one US basket. • The strategy is called ‘nano’ (ultrasmall) because it holds only FIVE assets — fewer than other Lazy Portfolios. That’s not much diversification, but it’s just enough that holding only the strongest THREE assets every month sharply improves your gains. Figure 1. The Nano Portfolio’s allocation of one of its five positions to non-US stocks reflects the adage that you shouldn’t keep all your eggs in one Read More 

Muscular Investing

The 7Twelve Portfolio Greatly Improves with a Momentum Rule

by Brian Livingston

If you own 12 ETFs in equal weights at all times, you’re probably following the 7Twelve strategy, which holds more assets than other Lazy Portfolios. • The extra asset classes give 7Twelve some exposure to commodities and natural resources, which competing portfolios lack. Best of all, the broader menu allows 7Twelve to greatly improve, with much better gains and far smaller losses, when you add a simple Momentum Rule. Figure 1. Craig Israelsen’s strategy attempts to give investors exposure to seven global asset classes by holding 12 different funds at Read More 

Muscular Investing

The Coward's Portfolio Is More Profitable with One Rule Added, But...

by Brian Livingston

You can boost the gains of the so-called Coward’s Portfolio (aka the Smart Money Portfolio) by adding one easy tweak, but watch out — there’s a catch. • The strategy is not really for scaredy-cats but for people who don’t like surprises in their investments. A single extra step makes a big improvement in the portfolio’s returns, although you have to live with a serious trade-off. Figure 1. For the nervous investor, the Coward’s Portfolio offers a broad set of assets, if that kind of thing reassures you. Photo by Spiber.de/Shutterstock. Read More 

Muscular Investing

Make Your Lazy Portfolio More Muscular

by Brian Livingston

An investing fad called ‘Lazy Portfolios’ took hold in the 1990s. Just allocate fixed percentages of your money to every asset out there, it said. • Diversification is good, but these strategies seriously lag the S&P 500. And they’re risky, crashing almost as badly as the index. Fortunately, adding one easy step is all it takes to improve your gains and lower your losses. Figure 1. Lazy Portfolios never change their positions, except perhaps to rebalance back to their original percentages once a year. Photo by Comaniciu Dan/123RF. Read More 

Muscular Investing

Use Currency to Your Advantage, and Turn That Frown Upside-Down

by Brian Livingston

Changes in foreign-exchange prices may be too random to predict. But you can still use currency fluctuations to enhance your portfolio. • The trick is that many commodities, such as oil and gold, are priced in US dollars worldwide. A weak dollar or hyperinflation tends to make commodities and precious metals go up, measured in greenbacks. Figure 1. Photo of folded $5 bills by Juequian Fang. • Part 4 of a series. Parts 1, 2, and 3 appeared on May 21, 23, and 28, 2019. • In previous parts of this series, we saw that the vast majority of currency Read More 

Muscular Investing

Currency Movements May Be Too Weird for You to Make Profits

by Brian Livingston

Like many things that individuals try when trading against the professionals, foreign currencies look easy but are actually hard to eke a profit out of. • Unless you have some amazing, unheard-of talent, there may be no strategy that can consistently make you a winner at trading currencies. Even sophisticated funds that specialize in currencies don’t greatly profit. Figure 1. Currency movements look easy to predict but may be too random to reliably extract profits from. Illustration by Kaspri/Dreamstime. • Part 3 of a series. Parts 1 and 2 appeared on Read More 

Muscular Investing

Even When Your Funds Are Gone, the Game Might Not Be Over

by Brian Livingston

Foreign-exchange dealers offer enormous leverage to customers, and leverage can lead to enormous losses — greater than your entire balance. • Experience with global currency-trading brokers shows that they value the profits they earn from traders so much that even some busted account holders can be forgiven their debts, if it will keep the traders paying commissions and fees. Figure 1. Leverage can quickly put your account balance underwater, but even that may not stop traders at certain foreign-exchange brokers. Photo by Zwiebackesser/Shutterstock. • Read More 

Muscular Investing

Currency Trading is a Great Way to Lose Money

by Brian Livingston

Studies show that although 84% of currency traders think they can make profits, only 30% actually do. What can we learn from this fact? • People are vastly overconfident in their ability to wring gains from what seems like a simple game. In currency-dealer records, traders win more than 50% of their bets, but their losing trades cost almost double what the winning ones make. Figure 1. The idea of making profits from currency trading can fill us with wild expectations of riches, but it ain’t necessarily so. Photo by Roman Samborskyi/Shutterstock. • Tens Read More 

Muscular Investing

How to Invest Without Suffering from Behavioral Biases

by Brian Livingston

We make poor decisions when presented with financial data, because the subsconscious mind is in control of our interpretation of the facts. • Simply saying, ‘I will not be affected by my subconscious mind,’ is pointless. That very statement could well be another head-fake by parts of your brain that are not apparent. Fortunately, we now have tools to make better choices. Figure 1. Our subconscious mind is constantly making us see things that are not there, all the while reassuring us that the actions it directs are the most rational and logical steps we can take. Photo by Read More 

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