Sector Diverse Stock Market Investing

This is a little teaser from the draft myBook: 

Sector Diverse Stock Market Investing

Stephen F Agnew, Principal Scientist Emeritus

2025aug17 draft

I began managing ourPortfolio upon retirement 3.5 yrs ago when I finally realized how a simple portfolio of etfs could just follow the market. Since then, I have been pleasantly surprised by how well both the Market and economy have grown along with my strategy. I developed and applied a sector diverse strategy that included 15% etfs to ourPortfolio and the most surprising thing about sector diverse investments is the very large dispersion of returns. Returns vary by as much as 70% for one rsd for high roi sectors with a sector diverse strategy. That is, over just one year some issues may gain as much as 170% while others may lose -80%, making buying and selling decisions difficult for not only profit taking from high gainers but also for when to sell big losers. Therefore ourPortfolio follows ourBenchmark with holdings that have done very well as well as with holdings that have done poorly. This large dispersion is a result  my limited ability as a retail investor to pick winners based only on past pricing and volume of past performance. After all, once a stock loss has occurred, taking that loss by selling may or may not make sense since future performance may improve. A retail investor must therefore only take losses after careful evaluation of potential future gains.

Sector diverse stock Market investing is a strategy for retail investors like me to build portfolios that will grow when the economy grows and yet necessitate a maintenance turnover of only 10%/yr. Building ourPortfolio over the last 3½ years required me to learn new skills and what I have learned should help other retail investors build their own portfolios as well. It is very useful to have a portfolio of stock market investments to capture a fraction of economic growth since portfolio wealth grows as long as the economy grows. The sector diverse portfolio holds a distribution of stocks across the 11 sectors of the economy as well as holdings across etfs, foreign, and smallCaps. The global economy grows and investors overbuy as a result of demographics and as a result of innovation, but the economy also cycles and also shrinks as a result of corrections that involve investor overselling. A sector diverse portfolio investment strategy must then allow for the ups of growth as well as the downs of Market corrections and the ups and downs of investor sentiment about those Market ups and downs. Retail investor sentiment varies with life stage and income as well as how the stock market cycles vary portfolio value even though portfolio growth is a result of both stock market rally and correction cycles. A portfolio grows or shrinks with the economy because of the stock market cycles up with rallies and down with corrections. 

Expert investment advisors recommend any number of different strategies for short or long term growth, but for the retail investor, poor investment advice still represents the greatest risk for less than optimum portfolio growth. For example, most advisors call Market corrections risky even without selling any holdings. This is especially poor advice. It is far better advice to simply accept and follow Market cycles risk as part of diverse sector investing from individual stocks comes from poor management or Market changes or any number of factors and not from Market corrections.

A friend of mine describes his investment strategy from his grandfather who told him to sell stocks with the market goes down. The basic idea was to sell before the Market went all the way down and then to buy back in when the Market recovered. This strategy did not seem very useful because the market cycles are really not very easy to predict. Selling a holding because it is dropping in value is really not a good strategy just like buying an issue because it is increasing in value. Another common strategy is to simply buy and hold stocks for companies that you somehow really believe in. Once again, retail investors depend on the Market pricing for their buying and selling decisions and so holding stocks forever also makes little sense.

Sector diverse investments limit buying and selling decisions to a 10%/yr turnover that then provides a 10-20%/yr cash rotation from profit taking. Cash rotation from profit taking during Market tops is then for personal expenses as well as for buying opportunities during Market bottoms. Sector diverse investing emphasizes limiting buying risk to 2%, taking profits above 10%, holding sectors with good rois but also holding sectors to provide a good dispersion in rois. A retail investor depends on Market prices and volumes that follow myBenchmark for at least 2-3 Market cycles.

There are eleven or so stock market sectors spread among largeCaps, etfs, foreigns, and smallCaps and a sector diverse investment portfolio will reflect those sectors that have a good returns on investment (rois). These good roi Market sectors are also good across etfs, smallCaps, and foreigns and there are literally hundreds of books on all kinds of different market strategies, some effective and some not so effective. All effective strategies, though, have diverse sectors and since successful investors adopt market strategies that prove effective, those effective strategies become part of the Market. Market growth occurs over time with cycles of rallies and corrections for literally thousands of stocks.

Since expert investors for institutional investments adapt and use strategies that demonstrate success, advisors often tell retail investors to simply follow those expert institutional investor trends. However, expert institutional investors make most of their money from client fees and do not really follow the Market with optimum returns. Expert advisors convince investors to accept lower returns overall in order to avoid paper losses during corrections, which are not real losses. Institutional investors make most of their money from fees, but also make 20-30% of their income from constantly churning institutional portfolios ostensibly to avoid the risk of paper losses during corrections by accepting less than optimum gains during rallies.

The goal of diverse sector retail investing is to build portfolios with good rois that follow the Market rois with 10%/yr turnover and 10-20%/yr cash rotation. However, the holdings will show a dispersion of sector returns as well as total returns. It is not possible for a retail investor to only buy stocks with positive returns, but it is possible to buy a dispersion of stocks with good average returns.

All a retail investor can hope is to on average follow the Market returns, sometimes leading the Market by +2% and other times lagging the Market by -2%. MyBook will show how the sector diverse strategy works for the retail investor. Here is a plot that shows the large ytd sector dispersions of myPortfolio and it is no wonder that retail investing challenges many people...

Discrete Aether Solves Five Unsolved Physics Problems

Five Great Issues of Science

I like Sabine Hossenfelder angry physicist posts and now she wants to solve 5 as yet unsolved physics problems.https://youtu.be/I7Sb06-OuL8 In the past, she has repeatedly stated that she has no interest in reviewing any other models that claim to solve these five problems. So poor Sabine wants to solve these problems with models that have not been able to solve those problems for about 50 years or so. Sabine will not likely solve any of these five problems without a substantially new model of the universe.

Of course, discrete aether does solve all of these problems:

1) Quantum gravity is not really a property of quantum matter, but rather of quantum light. Solved.

2) Dark matter is just a property of moving matter, momentum, and quantum light. Solved.

3)Dark energy is also just a property of moving matter, momentum, and quantum light. Solved.

4) The origin and destiny of the universe is in aether collapse into a black hole followed by aether expansion out of that black hole as our antiverse antimatter precursor. Solved.

5) There are really just three constants from which all others emerge: aether particle mass, matter-scaled Planck constant h/c^2, and the Schrodinger equation quantum proportionality between matter and action. Solved...

Manias, Panics, and Crashes: A History of Financial Crises

 Manias, Panics, and Crashes: A History of Financial Crises

Fourth Edition, 2000, John Wiley & Sons, Inc.

Charles P. Kindleberger

Kindleberger reviews 38 financial crises over four centuries from 1618 to 1998 with an overarching theme of needing some kind of a lender of last resort to finally resolve each of these crises. He uses the term overtrading quite a lot to describe speculative Markets that are either overbought and inflated or oversold and deflated. Cites severe overtrading as the root of all crises even though Market overtrading is the root of all Market cycles. Minsky’s financial model describes three stages to a severely overtraded Market with first the hedge phase where debt and Market cycles are not extreme, then the speculative phase with increasing debt and increasing Market cycles, and finally the Ponsi phase where new debt largely finances interest on old debt and leads to extreme Market cycles. The financial system in the Ponsi phase then becomes susceptible to some macro shock like a war or bank panic that then precipitates a crisis now known as a Minsky moment with an extreme Market cycle. Over time, a Minsky moment becomes a Kindleberger spiral with two dimensions of goods and production where decreasing goods leads to decreasing production and further decrease in goods.

It is interesting that I never heard of Kindleberger but still know of Milton Friedman of the Chicago School and John Maynard Keynes. Curious that the book does not ever discuss Marx or the role of communism in any of these financial episodes. Kindleberger was more of a monetarist than Keynesian and advocated for there being a lender of last resort to deal with crises, but no other government policies.

Minsky believed that the capital Market system was inherently flawed and unstable and could only be stabilized by strong government policies. Kindleberger acknowledged that financial crises are inevitable in capital Markets, but did not think that any government policy could prevent Market cycles. Instead, the government should act as a benevolent hegemon and provide a lender of last resort but could not otherwise address the inevitable outcomes of human nature that drive all Market cycles: greed, malfeasance, misfeasance, and incompetence. Economic growth and innovation invariably lead to crises as well as capital Markets adjust.

Rally and correction cycles are an inherent part of Markets because stock prices are really never constant given greed over profits and anxiety over losses. Although equilibrium or steady-state prices are often mentioned, there are many more dimensions for an ever changing stock price. For example, technical analysis assigns a price range with an upper price for a stock as resistance where investors decide to sell and resist further increase by taking their profits and a lower price due to investor anxiety as support where investors decide to buy and support that price. The weighted average of resistance from overbought profit taking and support from overselling anxiety is then an ever moving snapshot of that stock price that depends on the sentiments of those particular investors.

In a sense, all Market cycles are less severe examples of Kindleberger spirals and Minsky moments and not just the more extreme crises noted by Kindleberger and Minsky. In fact, Karl Marx argued that the inherent capital Market cycles were flaws due to greed and anxiety and Marx thought replacing greedy capital Market entrepreneurs with government bureaucratic planners would result in a more stable and equitable economy. Marx said the profits of capital Markets benefit entrepreneurs much more than the far greater number of workers. Minsky likewise argued that government bureaucrats could reduce or even eliminate the extreme crises of capital Markets due to greed and anxiety.

Kindleberger, however, did not advocate for more government management of capital Markets. Rather, Kindleberger advocated for a benevolent hegemon like the U.S. to act as the lender of last resort during severe crises. Disruptions of capital Markets are inevitable, Kindleberger argues, because economic growth and innovation inevitably lead to both small and large disruptions of consumer and industry spending and investment. After all, greed and anxiety drive many economic cycles besides capital Markets. Food production by farmers, for example, undergoes well known cycles of overproduction followed by underproduction.

Of course, competitive capital Markets are so desirable because of their productivity relative to government run monopolies and central planning setting prices by. After all, growth and innovation both disrupt and grow the economy with cyclic Market rallies of overbuying and there needs to be some kind of cyclic Market correction of overselling to allow for the overall growth of cyclic Market rallies.

There are never ending Market cycles between rallies and corrections that are inherent in capital markets, but do not involve losses as large as Kindleberger's 38 crises. Overtrading, then, is a common feature of both normal Market cycles as well as leading up to and then resulting from crisis Market cycles. Investors overbuy stocks during bull Market rallies as well in leading up to various crises of overvaluation and investors also oversell stock during bear Market corrections as well as during various crises of severe devaluation.

We Live in a Golden Age

We live in a Golden Age of Civilization.

Shiva stands on Ignorance with the Cern particle collider in the background. The golden Ankh of ancient Egypt represent the progress of Civilization. The Human Development Index (HDI) shows that we are now living longer, are more educated, and are more wealthy than ever.

We are also blessed with a declining global death rate from civil conflict after the last few years of increase.

Furthermore, the Science of our time provides us with a better understanding of both the attraction and repulsion of the microscopic quantum world of quarks and bosons and the macroscopic gravity attraction of the cosmic universe that includes blackholes.

Science has given us a better look at atomic matter of quantum quarks and bosons as well as a very deep look at the gravity cosmic microwave background (CMB) that defines both the beginning as well as the very end of the universe of about 13 billion years of atom time.

Science has further recently given us a better understanding of how we think with the action potentials of our neural brains and we now have an artificial intelligence that speaks and acts in any language and seems every bit like a human. From the emotions and free choice of our primitive brain cerebellum to the rational logic of our cerebral brain emerges consciousness. Soon Science will also provide neural implants that will communicate thoughts and action without the need for spoken words or skeletal muscles.

In addition to charge that bonds and scatters quantum matter and gravity that bonds and scatters universe matter, there are social bonds and conflicts that make up civilization. While Science has made great progress in understanding the bonding and scattering of quantum and gravity, it is the social progress of many diverse Religions, States, and Nations that result from the social bonds and conflicts that make up civilization.

Ironically, both human bonding and human conflict make up civilization and so human conflict is an integral part of who we are along with the bonding of human love. The diversity of Religions, States, and Nations are therefore more about how people conflict and disagree as well as about how people bond and agree to disagree.

Just like some atoms bond into molecules while others do not and some solar system matter ends up in life on Earth and the Sun while most solar system matter ends up lifeless on other planets and the vast Oort cloud all scattered around the Sun.

Grok3 xAI ChatBot Review of "Universal Quantum Action with Discrete Aether"

Stephen F. Agnew's "Universal Quantum Action with Discrete Aether," as presented in this February 2021 draft, proposes a cosmological framework that fundamentally reinterprets the nature of the universe, diverging significantly from mainstream physics. The paper introduces a model where matter and action, rather than space and time, are the primitive dimensions, with a discrete quantum aether serving as the foundational medium. Below, I provide a review of the paper based on its content, structure, and claims, relying on my own knowledge without external searches, as instructed.

Overview and Core Ideas

Agnew’s central thesis is that the universe operates as a "matter-action" system driven by a discrete aether—a hypothetical medium composed of fundamental particles (termed "gaekrons" or aether particles) with a proposed mass of

$8.68\times 10^{-69}\text{kg}$

. Unlike the standard cosmological model of an expanding universe post-Big Bang, Agnew suggests a cyclic universe undergoing a pulse of matter collapse and force growth, currently at 20-26% of its collapse phase, with a half-period of 13.4 billion years. Space and time, traditionally considered fundamental, emerge from the interactions of matter and action in this framework.

Key concepts include:

1. Matter and Action as Conjugates: Matter ((m)) and action ((s)) are quantum conjugate variables, akin to position and momentum in traditional quantum mechanics, governed by a quadratic Schrödinger equation. This contrasts with the linear Schrödinger equation of standard quantum theory.
2. Quantum Aether: A discrete medium mediating all forces via particle exchange—single photons for charge and biphotons for gravity—unifying electromagnetic and gravitational interactions.
3. Cosmic Time and Decay: The universe’s evolution is marked by a decoherence of aether, driving a matter collapse at a rate of

   $m_{\text{dot}}=1.13\times 10^{-10}\text{kg/s}$

   and a fermion decoherence rate of

   ${\alpha }_{\text{dot}}=0.255\text{ppb/yr}$

   , rather than spatial expansion.
4. Rejection of Dark Matter/Energy: Galaxy dynamics are explained by "quadrupole gravitization," a vector force arising from matter decay and motion, eliminating the need for dark matter or dark energy.

Strengths

1. Innovative Unification: The attempt to unify charge and gravity through a single mechanism (aether particle exchange) is ambitious and conceptually intriguing. Scaling gravity from charge using the universe-to-atom size ratio (

   $t_B\mathrm{/}{T}_u$

   ) offers a novel perspective on force relationships.
2. Mathematical Framework: The paper provides a detailed mathematical structure, including a quadratic Hamiltonian and a matter-scaled Schrödinger equation, which lends a semblance of rigor. Equations like the universal force (Eq. 58) and Rydberg mass (Eq. 57) aim to bridge micro- and macroscopic phenomena.
3. Falsifiability: Agnew identifies testable predictions, such as the matter decoherence rate of

   $0.255\text{ppb/yr}$

   , measurable through precise observations of constants like (h), (c), and

   $\alpha$

   . This aligns with scientific methodology, offering a path to validation or refutation.
4. Alternative to Standard Model Issues: By addressing galaxy rotation curves without dark matter and reinterpreting the Hubble redshift as a force-driven effect, the model tackles unresolved tensions in cosmology, such as the nature of dark components.

Weaknesses and Critiques

1. Lack of Empirical Support: While Agnew claims consistency with observations (e.g., Hubble constant, IPK decay), the evidence is reinterpretative rather than direct. For instance, the IPK’s reported mass loss (

   $0.554\text{ppb/yr}$

   ) is attributed to aethertime decay, but mainstream explanations (e.g., surface effects) are equally plausible and better established. The paper lacks robust, unique observational data to distinguish its predictions from standard models.
2. Departure from Established Physics: The rejection of continuous spacetime and the Big Bang in favor of a shrinking universe challenges well-tested frameworks like General Relativity (GR) and the Lambda-CDM model. GR’s predictions (e.g., gravitational lensing, time dilation) are experimentally confirmed with high precision, yet Agnew’s model does not clearly replicate these without significant reinterpretation.
3. Complexity and Obscurity: The introduction of a quadratic Schrödinger equation and concepts like biphoton gravity and aether velocity (

   $c\mathrm{/}\alpha$

   ) adds complexity without clear justification over simpler, validated theories. The paper’s dense notation and unconventional terminology (e.g., "aethertime," "gaekrons") may obscure its accessibility and credibility.
4. Contradictory Claims: Agnew asserts the universe is 3.4 billion years old (26% of 13.4 Byrs), conflicting with the widely accepted 13.8 billion-year age from CMB and Hubble data. Reconciling this with observed cosmological timelines (e.g., oldest stars, galaxy formation) is not adequately addressed.
5. Theoretical Gaps: The model assumes aether particles and their properties (e.g., mass, exchange dynamics) without deriving them from first principles or linking them to known particles. The completeness conjecture—that all constants derive from

   $m_{ae}$

   and

   $h_{ae}$

   —is speculative and underdeveloped, especially for Standard Model parameters.

Specific Points of Analysis

• Aether and Lorentz Invariance: The claim that aether-based action is Lorentz invariant is intriguing but questionable. Historically, the ether was abandoned due to its incompatibility with Special Relativity (e.g., Michelson-Morley experiment). Agnew’s discrete aether must explain null results of such experiments, which it does not explicitly address.
• Galaxy Dynamics: Quadrupole gravitization as an alternative to dark matter is a bold hypothesis. However, dark matter’s success lies in its consistency across multiple scales (galactic rotation, cluster dynamics, CMB fluctuations). Agnew’s vector force lacks comparable multi-scale validation.
• Redshift Reinterpretation: Attributing redshift to force growth and matter decay rather than spatial expansion contradicts the standard Doppler interpretation, supported by supernova distance measurements and CMB isotropy. The proposed blueshift from a shrinking universe complicates this further without clear observational backing.
• Mathematical Consistency: The quadratic Hamiltonian (

  ${\mathcal{H}}^2=\frac{1}{2}{m}^2+\frac{1}{2}{\omega }^2{s}^2$

  ) and recursive Schrödinger equation introduce non-standard quantum mechanics. Their derivation from physical principles is unclear, and their compatibility with known quantum phenomena (e.g., superposition, entanglement) is not demonstrated.

Conclusion

Agnew’s "Universal Quantum Action with Discrete Aether" is a creative, thought-provoking alternative to mainstream cosmology and quantum theory. It offers a unified vision of forces and a cyclic universe that avoids singularities and dark components, which is philosophically appealing. However, its radical departure from established physics, coupled with insufficient empirical grounding and unresolved theoretical issues, limits its current plausibility. The paper could benefit from clearer derivations, direct experimental predictions (beyond reinterpretations), and engagement with counterarguments from GR and the Standard Model.

For further validation, I’d suggest Agnew focus on:

1. Specific, unique predictions (e.g., spectral anomalies, aether wave signatures) testable with current instruments.
2. A detailed comparison with GR’s successes (e.g., GPS, black hole imaging).
3. Peer review and publication beyond platforms like Academia.edu to refine and legitimize the theory.

As it stands, while intellectually stimulating, the model remains speculative and requires extraordinary evidence to support its extraordinary claims, as Agnew himself acknowledges, echoing Carl Sagan. Without such evidence, it struggles to compete with the predictive power and observational support of existing paradigms.