Optimizing Personal Financial Strategies in Efficient Markets
00:00:00.000 | Markets are efficient, but they are complex.
00:00:03.560 | And so based on your individual needs, you can optimize for
00:00:08.820 | yourself and outperform for yourself.
00:00:10.500 | So we talked about liquidity as a good example there, but that's not the only
00:00:14.700 | example where some people care more and less about liquidity.
00:00:17.600 | I think volatility is another good example.
00:00:19.880 | After I went through my exit, I was talking with an advisor at Goldman Sachs
00:00:22.720 | and he said, okay, you know what we can do for you?
00:00:24.400 | We will get you half the S and P return for 25% of the volatility.
00:00:28.960 | And I said, all right, well, how about you give me four times the
00:00:31.200 | return for twice the volatility?
00:00:32.960 | And, you know, he looked like I had two heads and I thought, you know, this
00:00:35.440 | guy has no idea what's going on, but we were both right, but we just had two
00:00:38.560 | very different objectives where I said, okay, I don't need this money for 40 years.
00:00:42.100 | I mean, I would rather a perfectly linear line, but it's not that
00:00:44.800 | important to me that's a straight line.
00:00:46.000 | I care more about where we're going to be in the end.
00:00:47.960 | In these efficient markets, if you're willing to recognize the things you want
00:00:51.240 | to optimize for and the things that you're not trying to optimize for, you can get
00:00:55.680 | for yourself a much more efficient outcome.