Dick Stoken - Survival of the Fittest for Investors: Using Darwins Laws Osurvival of the Fittest for Investors: Using Darwins Laws of Evolution to Build a Winning Portfolio F Evolution to Build a Winning Portfolio

USING DARWINS LAWS of EVOLUTION to BUILD a WINNING PORTFOLIO

DICK STOKEN

Copyright 2012 by Dick Stoken. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

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To my grandparents, Benjamin Stoken, Ester Kite, Betty Twersky, and Harry Ogens, who crossed an ocean and settled in an alien culture to provide their descendants the promise of a better life. I hope the book is worthy of you.

PART 1
THE ORIGIN OF A NEW INVESTMENT STRATEGY

CHAPTER 1
The Investment Game

CHAPTER 2
The Investment Environment: An Ever Changing Landscape

CHAPTER 3
The Darwinian Alternative Framework

CHAPTER 4
The Stock Market Is a Living System

PART 2
VARIATION: THE FIRST IMPORTANT DARWINIAN INSIGHT

CHAPTER 5
An Alternative Investment Portfolio: Based on Variation

CHAPTER 6
A Passive Combined Asset Strategy

PART 3
FLUCTUATIONS: THE KEY TO UNDERSTANDING COMPLEX ADAPTIVE SYSTEMS

CHAPTER 7
Trends: The Central Feature of Our Investment and Economic World

CHAPTER 8
A Paradox in Our Investment and Economic World

PART 4
SELECTING ASSET CLASS FITS

CHAPTER 9
Critical Levels in the Stock Market

CHAPTER 10
Gold and Long-Term Treasuries: Buy and Replace

CHAPTER 11
REIT Estate Investment Trust Trends

CHAPTER 12
An Active Combined Asset Strategy

CHAPTER 13
Risk: Taking On More?

CHAPTER 14
The Twenty-first Century Real Estate Bubble

PART 5
A DARWINIAN WORLD

CHAPTER 15
The Agent Role in a Darwinian World

CHAPTER 16
How the Major Components of Search Engines Apply in Todays World 209

CHAPTER 17
Conclusion: Dont Sell Evolution Short

Thanks to:

Larry Bernstein, Kingsley Stoken, and Deidre Stoken McClurg, for patiently reading my manuscript and offering many helpful suggestions. You made it a better book than it would have been.

Joel Weisman, my agent and critic of the first part of the manuscript, for pointing me in the right direction.

Robin Kramer, my faithful assistant, who was always willing and able to perform the numerous chores necessary to bring this project to completion.

Gary Crossland, for providing many of the statistical calculations used in this book.

Michael McClurg, who diligently assisted Deidre with the graphics which enhanced the book.

Finally to the lovely Sandra Loebe-Stoken, who gets the award for putting up with a mate totally absorbed in his project.

The real trouble with this world of ours is not that it is an unreasonable world, nor even that it is a reasonable one. The commonest kind of trouble is that it is nearly reasonable, but not quite. Life is not an illogicality; yet it is a trap for logicians. It looks just a little bit more mathematical and regular than it is; its exactitude is obvious, but its inexactitude is hidden; its wildness lies in wait.

G. K. Chesterton

After graduating from the University of Chicago, School of Business, some 50-years ago, I felt, oh, so smart. I thought I had become a member of a small elite group who really understood our world and had acquired intellectual tools to be successful in whatever I chose to do. In my case, it was to be a trader.

I found an excellent opportunity at the Chicago Mercantile Exchange, where for a nominal sum of money I could purchase a membership and trade directly on the floor. I would be able to use my trading skills to beat the heck out of the market, in that case, a commodities market. Well, it wasnt as easy as I expected. Soon I recognized that all of my previous education was utterly useless in trying to outsmart a smart market. I realized that to survive and prosper in the rough-and-tumble environment of a marketplace, I would have to unlearn most everything that I had so painstakingly acquired and discover skills more attuned to dealing with an uncertain future. In this venture, I was completely on my own, as there were no teachers or blueprints to follow.