Evidence-Based investing comes from a compilation over more than a half century of many independent peer reviewed research results of how markets work. There are 12 key insights in this 4 part video series.
Here are the first 3 in this 4:28 video about market pricing insights:
- Group intelligence – the market does a better job than you can of forecasting prices.
- What causes prices to go up and down? The unexpected is impossible to predict ahead of time.
- Gurus are like unicorns. A fund manager may outperform for a short period of time, but knowing who they are ahead of time is not possible. Developing a diversified portfolio of fund managers where all outperform is unlikely. The long term is the rest of your life – not some subset of time from the past.
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PS. In the interest of disclosure: I do use DFA sub-managed SA Funds with most clients (not a fund requirement, but a business decision I’ve made). Analogies that explain the difference between investing and planning (Yes, they are different)! :
- Investing is the fuel for your plan – it is not the plan itself.
- Investing are the cables that support your bridge which is the plan that gets you where you are to where you want to get to.
This blog is not a solicitation; simply an explanation of the basic philosophy and approach.
Note: The video was produced by a different advisory firm – not Better Financial Education. The video describes the basic factors pioneered by Dimensional and many others which Better Financial Education also applies.