Markets are efficient – The stock markets reflect the collective knowledge and expectations of all investors. When new information becomes available, depending on whether it’s better or worse than expected, it will impact a stock’s price. However, this new information is absorbed into current prices so quickly that it is very difficult to profit from any information advantage.
Active management does not work – Stock picking and market timing strategies are myths that do not work. There are decades of academic research that prove this. But these myths are perpetuated by those that stand to profit the most, Wall Street and the financial media. Occasionally a manager will guess correctly, but no more than would be randomly expected. The problem is identifying these managers ahead of time so you can take advantage of their good fortune.
Risk & return are related – Riskier assets provide higher than expected returns as compensation for the greater risk.
Diversification is key – There are many market forces that can influence the stock market very quickly, up or down. The future is by nature unpredictable. Without the benefit of knowing which assets to own ahead of time, studies show that by being globally diversified, you increase your odds of success in achieving the expected returns of the capital markets.
Transparency is essential – We believe in full disclosure. We charge a fee based on assets that we manage. Our clients pay us, not the companies we may utilize to implement a strategy. There are no conflicts of interest. For a fee schedule please click here.