Investment Principles...The Academic View
Markets Work...The Efficient Market Hypothesis (EMH) states that, from an investment perspective, capital markets are highly efficient in the sense that all available information is rapidly digested and reflected in the market prices of securities.
Academic Research Adds Value...Tilts to the Small Cap and Value allocations in an equity portfolio can lead to increased expected returns over time.
Diversification is Key...A globally diversified portfolio can produce greater expected returns with lower standard deviations than one with less comprehensive diversification.
Passive Investing is the Solution...Choosing a low cost, tax efficient, passive investment strategy gives an investor the best chance to achieve market-like returns over the long haul.
Fixed Income Reduces Portfolio Volatility...Keeping maturities short, credit quality high and eliminating currency risk allows the fixed income portion of the portfolio to serve primarily to reduce risk.
Costs Matter...In investing, you get what you don't pay for.
Tax Management is Critical...It's not the return you earn, but the return you keep that counts.
A Plan is the Answer...Having a well-grounded, structured investment plan will help you navigate through the euphoria of up markets and the despair of down markets, ignore the noise coming from Wall Street and rigorously hold to a discipline.
Five Simple Stock Market Truths
- Even the pros can't beat the market consistently.
- There's never a bad time to invest.
- We're often our own worst enemy.
- Every penny of cost is a penny out of your pocket.
- Don't try to outsmart the market...settle for matching it.