Investment Philosophy

There are many Investment Philosophies.

Investment PhilosophyI adhere to the philosophy expressed by Dimensional, a firm that applies academic research in order to experience both risk and return from various asset classes over time. This investment philosophy is applied through a Structured Investing approach which consists of Four Key Questions.

What most investors are missing is a sound philosophy supported by a compatible structure based on basic tenets. Instead, greed and fear reign as a philosophy supported by chasing returns on things that are going up and abandoning things that are going down. Dalbar studies show that investors do not know how to behave when they invest. Standard and Poor’s Index vs Active scorecards as well as their  Persistence scorecards show how consistently achieving market returns is difficult for actively managed mutual funds as well.

An investment philosophy should be rigourously throught through. A sound philosophy properly structrued on key tenets puts together all of the above factors in a manner consistent with what you are trying to do. How sound is your philosophy?

, , , ,

6 Responses to Investment Philosophy

  1. Larry Frank, Sr. September 18, 2012 at 6:49 pm #

    Here’s an article in the Huffington Post by Dan Solin “The Big Lie Is a Cruel Hoax”
    Posted: 09/04/2012 5:45 pm where Solin talks about active versus index investing. He lists John Bogle of Vanguard and many academics who argue the evidence supports indexing. The Big Lie Is a Cruel Hoax

  2. Larry Frank, Sr. May 22, 2017 at 9:12 am #

    A number of recent work has found that DALBAR overstates the effect of investor poor decision making. However, there still is a tendency for investors to hurt their returns through bad decisions nevertheless:

    Blanchett: “Mutual fund investors haven’t made exceptional timing decisions, but they haven’t been nearly as dumb as the DALBAR numbers claim. It’s hard to beat the market – especially through market timing – and few investors have been able to do it consistently for any reasonable time period. Investors and financial advisors should follow a disciplined approach that is focused on staying invested for the long-term rather than trying to beat the average investor (whomever he or she may be).”



  1. My latest research published … | Better Financial Education Blog - April 4, 2012

    […] people miss is that ALL the research in this area is based on indexes. This is an important reason why I use only passively designed indexes with you as […]

  2. Why aren’t more blogs about investing? | Better Financial Education Blog - April 30, 2012

    […] a rational approach is healthier for your wealth. Having a stable and long lasting Investment Philosophy removes speculation, market timing, worrying about what’s “best” or […]

  3. Sell in May and Go Away? | Better Financial Education Blog - May 31, 2012

    […] conclusion? Develope a prudent plan supported by an academically based philosophy that is flexible as the situation […]

  4. What does Loring Ward do? | Better Financial Education Blog - May 21, 2018

    […] Investment Philosophy (in my case DFA’s Philosophy sums it up the best) (i.e., philosophy of both the adviser and of the firm implementing that philosophy – do they match?), […]

Leave a Reply