Is My Investing Strategy Broken?
Top 5 of the Week of May 1
In our Top 5 this week, Isaac Presley, CFA of The Cordant Blog asks how we know if our investing strategy is broken. Chairman & CIO of Ritholtz Wealth Management, Barry Ritholtz, writing for Bloomberg View, advises investors to respond to financial news cautiously. And Ben Carlson, A Wealth of Common Sense, looks at how the market is both always the same and different from the past.
Meb Faber, author and co-founder of Cambria Investment Management, shares his portfolio insights with us. And Sherree DeCovny, writing for The CFA Institute, discusses how ESG investing is becoming more mainstream…
Is My Investing Strategy Broken?
- Extended periods of meager returns are enough to try any investor’s patience, and it’s during these low times that you start to question the strength of your strategy
- While these periods of low returns are no fun to wait out, they’re not unexpected with any investing strategy
- As long as your returns remain within your strategy’s expected range of probable outcomes, stay convicted and stop distrusting your chosen investing approach
“Be Careful What You Read”
- With so many online investment writers and blogs available, it’s difficult for investors to steer through financial media and be able to discern truth from noise
- Just as you assess stocks, so too should you learn about who and what you’re reading, so you’re not unwittingly reading anything misleading
- Don’t search financial media for the latest stock ‘tip’—apply critical thinking to your reading, especially where money is concerned
A View of the Past
- We look to market history to help us understand the future, and previous cycles demonstrate how some things remain the same while others are always varying
- But markets mature in line with our growing life expectancies, technological advances, and spending/investing behaviors—as reflected in changing interest and inflation
- Act wisely and always plan for lower future returns than the past may indicate, as long as your behavior remains calm the uncertainty of the future won’t affect you too badly
Total TAIL Transparency
- It’s unnerving if investment writers don’t follow their own advice or if fund managers aren’t invested in their own funds
- In this light, Meb Faber explains his recent allocation to his company’s (Cambria) new TAIL Risk ETF; a strategy to protect against market declines—unexpected or not
- Though the fund is expected to lose money over time, it aims to hedge against big market downturns and volatility using US government bonds and put options on the S&P 500—a prudent course of action given the current bull market state
Mainstream Green Investing
- Impact investing—based on environmental, social, and governance (ESG) factors—used to be limited to a niche group of investors
- But as we become more aware of our social responsibility, ESG investing is growing more mainstream and accessible in all asset classes
- Research also shows that companies who employ sustainable initiatives offer better equity performance than those who don’t
Are you an ESG investor? Share your experience in the section below
Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form—and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.
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DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article. The Become a Better Investor Team doesn’t necessarily endorse any stocks or shares mentioned in the articles or the author of such articles linked to and summarized in Top 5 of the Week and cannot guarantee the accuracy of its information.