About Us
Insightful Investing was founded by Joe DiNunno to make it easier for people who don’t have the time, experience, or expertise to make profitable investment choices. We have been making profitable investment choices for over 20 years. We started with Fidelity Mutual Funds by applying what was learned from from the American Association of Individual Investors. Eventually we gained experience with stocks, options, futures and hedging strategies. While the Internet now provides anyone with more than enough information to analyze investments, it is this information overload that we intend to help you deal with, by writing a concise newsletter that you can read and follow with very little time taken away from the more important things in your life.
Over the years, we have built systems to track and report on the performance of Investment Managers and Mutual Funds for Institutional Investors. From there we developed systems for choosing Investment Managers and Mutual Funds that would be used to create a recommended list for Institutional Investors and High Net Worth Investors. With all of this experience being used for the big players in the financial markets, we decided to make the benefits of this experience available to all investors willing to take advantage of it.
Asset Allocation Modeling
Little did we know when we started running financial simulation models back in 1994 that in less than 10 years the financial markets would provide us with investment return extremes that regular spreadsheet models never considered. The key to these models was the use of investment return probability distributions. Since the long-term expected return of equities is near 10% and the standard deviation is near +/- 16%, one would expect that 96% of the time returns should fall between -22% and + 42%. While the S&P 500 came close to the top of that extreme in 1997, it also managed to dip slightly below the low end in 2002. Technology Mutual Fund returns managed to fall outside of both extremes.
The goal of these simulation models was to seek the asset allocation which produced the highest total return with the lowest likelihood of producing a negative return by simulating uncertainty about the future. Although this analysis was used to show how corporations would be better off having some of their spare cash invested in the stock market and a broad mix of bonds rather than all of it invested in money market funds and short-term bonds, there were lessons we learned that can be applied to the individual investor. Our investigation showed us what would happen to an investment portfolio over a 5 year period in the 1 in 50 chance that negative investment returns during part of that time period were worse than even the “Worst Case Scenario” of a typical analysis. What we found was an asset allocation properly balanced between stocks and bonds would produce better returns and significantly reduce the overall risk of a portfolio versus a the more conservative approach.
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