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:
Here are the first 3 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.
PS. Analogies that explain the difference between investing and planning (Yes, they are different)! :
This blog is not a solicitation; simply an explanation of the basic philosophy and approach.