These three ingredients combine for a successful investment process
Start with Risk: We Manage It!
- By diversifying globally, across many kinds or classes of securities Stock/Bonds, etc.
- By regular rebalancing. It’s the one scientifically verified way to manage risk.
Understanding Human Nature in the Markets
The stock market reflects human nature:
- People are ingenious, resilient and pursue growth.
- Markets are also resilient, intelligent and deliver owner value through growth.
- Stock prices anticipate the economy, drive through declines and emerge higher.
Harnessing Useful Information
Appreciate that information is only as powerful as its ability to be practically applied. The global economy and markets are like the weather. They’re too chaotic for short-term prediction. But there are long-term patterns to be harnessed. These are some examples:
- Stocks outperform bonds over the long run.
- Bonds are more stable than Stocks
- Asset classes have distinct risk/return characteristics from one another.
- Combining these and routinely rebalancing has reduced risk and increased returns.
- Wisdom is discernible in the continuous trading of securities worldwide.
- Trying to outsmart that wisdom is expensive and does not work.
- This wisdom helps deliver market returns with less than market risk.
Process for designing and managing investment portfolios:
- Allocate to known, measurable risk/return factors.
- Use institutional grade funds and share classes (Mutual Funds and ETF’s) with low fees.
- Employ low-cost, tax sensitive strategies, methods and funds.
- Systematically rebalance.
The wisdom of WorthWhile Wealth Council is what we offer!