I have been advising clients about investments for more than 30 years and much has changed in finance since my early days at Kidder Peabody & Co. in Philadelphia. The advances in financial theory and practice have been monumental. One reason for the advances is that cheap computing has made the study of financial data much less expensive and much faster. In addition, fields of study like Behavioral Finance have evolved from a few good ideas to fundamental building blocks in our understanding of what it takes to be a successful investor.
As a result of my personal experiences and the study of the work of financial academics, I have learned 3 key insights that I believe make the best investors confident and successful. They are:
- 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 from the research of 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 participants. You simply have to know how to harness the power of free market capitalism. You do this by playing 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 emotional high and low as an investor. You need only be aware of how often your emotions will tempt you off course.
We recently published a new paper, Evidence-Based Investment Insights, which is designed to help investors with the three points listed above. Please feel free to download it from our website. In addition, we have developed 4 short videos to explain the 12 key takeaways from the paper. You can expect to read more about the videos in future blog posts.
If you have questions about the paper or the videos, please feel free to contact me at email@example.com.