With autocorrelation, a year of daily returns is not 252 independent bets. Effective sample size falls sharply as correlation rises.

Autocorrelation reduces the power of diversification. Returns stop behaving like independent bets, and convergence slows.

Compounding has a dark side: it creates positive fat tails but lowers average returns. This is why professionals avoid pure compounding.

Compounding more frequently amplifies both gains and losses. The path matters, not just the average return.

Diversification not only reduces variance; it also shrinks skewness and kurtosis. Extreme outcomes fade as independent bets increase.

Diversification is the only free lunch. As independent bets increase, variance shrinks and returns converge toward normality.

After a decade in high finance, including 6 years at one of the world’s largest hedge funds, I’m building something different:
A personal trading system with institutional rigor and civic intent.