Latest Insights & Research

The Fed's September Rate Cut: High Probability and Strategic Portfolio Positioning

• Fabio Capela
• Federal reserve policy , Interest rate analysis , Portfolio strategy , Bond investing , Sector rotation , Market analysis , Monetary policy , Investment strategy

Bottom Line Up Front: Markets are pricing in an approximately 90% chance of a Federal Reserve rate cut in September 2025, driven by weaker-than-expected employment data and evolving economic conditions. Investors should consider repositioning portfolios to benefit from this likely shift in monetary policy.

Is 2025 Actually More Chaotic Than Other Years? (And What to Do About It)

• Fabio Capela
• Market analysis , Systematic investing , Trump tariffs , Trade policy , Market volatility , Portfolio strategy , Current markets , Economic analysis

I’ve heard this phrase dozens of times in 2025—from fellow investors, financial media, and even seasoned portfolio managers. There’s a pervasive sense that something fundamental has shifted, that traditional relationships between assets have broken down, and that we’re navigating uncharted territory.

Building a 3-Fund Portfolio: Step-by-Step Walkthrough

• Fabio Capela
• Portfolio management , Index investing , Investment strategy , Simple investing , Asset allocation , Etf investing , Mutual funds , Beginner investing

By the end of this guide, you’ll know exactly how to build and maintain a complete investment portfolio using just three low-cost index funds. No complicated stock picking, no timing the market, no endless research required.

The Hidden Reality of High Sharpe Ratios: Why Even Elite Strategies Face Monthly Losses

• Fabio Capela
• Risk management , Investment strategy , Portfolio management , Quantitative finance , Statistical analysis , Performance evaluation , Investment mathematics , Risk assessment

The Sharpe ratio stands as one of finance’s most celebrated metrics, elegantly capturing risk-adjusted returns in a single number. An annualized Sharpe ratio of 2.0 sounds impressive—it represents exceptional risk-adjusted performance that places a strategy in the top tier of investment approaches. Yet here lies a reality that surprises many investors: even strategies with outstanding annualized Sharpe ratios experience negative months far more frequently than intuition suggests.

The Efficient Frontier is a Beautiful Lie: Why 'Optimal' Portfolios Fail in Real Markets

• Fabio Capela
• Portfolio theory , Quantitative finance , Modern portfolio theory , Risk management , Mathematical finance , Investment mathematics , Portfolio construction , Academic finance

If you’ve ever opened up an investing textbook, you’ve seen the chart. A smooth, upward-curving line — the efficient frontier — showing a perfect relationship between risk and return. All you need to do is plug in your estimates for expected returns, volatilities, and correlations, and voilà: the optimal portfolio is right there in front of you.

Variability Drain: The Silent Killer of Long-Term Compounding

• Fabio Capela
• Systematic investing , Portfolio mathematics , Compounding , Risk management , Quantitative finance , Volatility management , Long term investing , Portfolio optimization

You spend years refining your strategy. You optimize your entries and exits. You backtest it across decades. On paper, it shows strong returns. Maybe even impressive alpha. But something keeps bothering you. Despite solid average returns, your portfolio isn’t growing the way you expect. You’re not losing in any dramatic way — no catastrophic drawdowns, no obvious mistakes. But something subtle is bleeding your wealth. Quietly. Relentlessly.

Why I Never Use Stop Losses (And You Shouldn't Either)

• Fabio Capela
• Risk management , Investment strategy , Portfolio management , Systematic investing , Trading psychology , Position sizing , Market volatility , Investment discipline

“You should always use stop losses.”

I’ve heard this advice countless times from financial advisors, trading courses, and investment books. It’s supposed to be one of the fundamental rules of risk management—set a level where you’ll cut your losses and stick to it no matter what.

How Fractional Differencing Revolutionized My Feature Engineering for Investment Strategies

• Fabio Capela
• Quantitative finance , Feature engineering , Machine learning , Systematic investing , Financial mathematics , Time series analysis , Advanced analytics , Algorithmic trading

As a theoretical physicist turned systematic investor, I’ve always been fascinated by the mathematical structures underlying financial markets. While most investors focus on price movements and traditional technical indicators, I discovered that the real edge comes from understanding the deeper statistical properties of market data—particularly how to extract meaningful features that preserve both trend information and stationarity.

Why I Stopped Believing You Have to Choose Between High Returns and Low Risk

• Fabio Capela
• Low volatility investing , Risk management , Portfolio optimization , Systematic investing , Investment strategy , Volatility control , Asset allocation , Risk return analysis

Every investor gets told the same story: if you want high returns, you have to accept high risk. Want to play it safe? You’ll have to settle for mediocre returns. It’s supposedly the fundamental law of investing, as immutable as gravity.

The One Number That Changed How I Think About Investment Risk

• Fabio Capela
• Risk management , Sharpe ratio , Risk adjusted returns , Portfolio analysis , Investment metrics , Systematic investing , Performance measurement , Quantitative finance

For years, I focused on the wrong metric when evaluating my investment performance. Like most investors, I obsessed over returns. How much did I make this month? How much did I make this year? How did my portfolio compare to the S&P 500?