Buy and Hold Is Dead: How to Make Money and Control Risk in Any Market

Chapter 1. The Investment Rate

The Investment Rate is the core of all of my analysis, and it is the catalyst for all of my trading strategies, too. It influences everything we do. Given the sweeping importance of this tool, I will start our discussion on how to make money in a volatile market by explaining the origins and properties of this tool and then build from that foundation as we move forward. Although proof of the Investment Rate is important, the discovery process itself is equally important as it reveals the simplicity of this model. Therefore, I think it is important to address this first. So, let's begin.

Economics Is All About People

My empirical journey to the land of economics did not begin with a Harvard MBA, or a doctorate from MIT. My drive to be the economist and independent market strategist I am today started another way. In fact, I confess that economics bored me in college. Although my grades were at the top of my class, I could barely stay awake during lectures. Initially, all of it seemed boring. The study of economics came easily to me, but the thought of applying those tools in the real world cast me from the science at that time. I was extremely social, and crunching numbers in a small office while surrounded by my intellectual peers seemed like the last thing I wanted to do. I was studying the works of Karl Marx, Thomas Malthus, and John Maynard Keynes, to name a few. The chairman of the Federal Reserve was Alan Greenspan, but he was not any different ...