In 2017, we hope that you will continue to focus on evidence-based investing as a guide for investment. Whether you have an investment advisor or are looking for one, keep these suggestions in mind.
Markets are Fairly Efficient – It’s wiser to work with rather than against the financial markets. Too many investors squander time and money trying to beat the markets.
Ignore the Siren Song of Daily Market Pricing – Rather than reacting to ever-changing conditions, invest your money according to factors that are knowable and controllable.
Financial Gurus & Other Unicorns – The evidence indicates that their ability to persistently beat the market is “rarer than rare.” Don’t waste your hard-earned money.
Full-Meal Deal of Diversification – In place of speculative investing, diversification is among your most important allies.
The Essence of Evidence-Based
Investing – What separates solid evidence from flakey findings? Evidence-based insights demand scholarly rigor, an objective outlook and robust peer review. Academic research is interested in what actually works. Wall Street research is designed to sell you stuff.
Factors That Figure in Your Evidence-Based Portfolio – 60+ years of evidence-based inquiry has identified three key stock market factors (equity, value and small-cap) plus a couple more for bonds (term and credit).
The Human Factor in Evidence-Based Investing – Behavioral finance helps us understand that our own, instinctive reactions to market events can easily trump any other market challenges we face. An objective advisor can help you avoid mishaps that your own myopic vision might miss.
Take-Home
When we began our series, we promised to skip the technical jargon, replacing it with three key insights for becoming a more confident investor.
Understand the Evidence.
You don’t have to have an advanced degree in financial economics to invest wisely. You need only know and heed the insights available from those who do have advanced degrees in financial economics.
Embrace Market Efficiencies.
You don’t have to be smarter, faster or luckier than the rest of the market. You need only structure your portfolio to play with rather than against the market and its expected returns.
Manage Your Behavioral Miscues.
You don’t have to – and won’t be able to – eliminate every high and low emotion you experience as an investor. You need only be aware of how often your instincts will tempt you off-course and manage your actions accordingly. (Hint: A professional advisor can add huge value here.)
How have we done so far in our goal to inform you, without overwhelming you? If we’ve succeeded in bringing our evidence-based investment ideas home for you, we would love to have the opportunity to continue the conversation with you in person. Give us a call today for a free, no obligation second opinion on your investment strategy.
Article by Brian Puckett, JD,CPA,PFS,CFP® www.AlignMyWealth.com
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Please note: Brian Puckett is affiliated with Align Wealth Management, a Federally Registered Investment Advisor. This article is for educational purposes only and is not intended as investment advice or a solicitation thereof. The views herein are those of Brian Puckett (not Paradise News) and are subject to change without notice.
While all information is believed to be from reliable sources, we can make no representation as to its completeness or accuracy. Certain material in this work may be proprietary to and copyrighted by third parties and is used by Brian Puckett and Align Wealth Management with permission. Reproduction or distribution for commercial purposes is prohibited. Please remember that all investing entails risk.