Same, Same But Different
Top 5 of the Week of November 6
Cullen Roche, the writer of Pragmatic Capitalism, kicks off our Top 5 this week with his perspective on the future of active management. David Merkel discusses the benefits of taking a simple approach to investing on The Aleph Blog. And Phil Huber, CIO for Huber Financial Advisors and author of bps and pieces, compares “the same side of two coins.”
Wealthfront’s Andy Rachleff examines the intangible nature of risk. And The Reformed Broker Joshua Brown helps us build up our tolerance to the growing bear market predictions…
An Active Future for All?
- The controversial idea that passive investing is a myth has become more accepted as more investors realize that “passive” indexing mirrors many different fund types
- This means the future will still include the deeply-entrenched active managers that the market knows of old—though they may dwindle in popularity for their sale of false hope
- Furthermore, active strategies will become more systemized, fees will come down, and the rising popularity of simple, liquid, tax-efficient ETFs will continue
Keep It Simple
- Taking a simple approach to investing can be incredibly beneficial, do this by choosing investments that you can understand—and explain—on a fundamental level
- Avoiding complex strategies will help you stay more rational in times of market crisis and evade negative, unexpected surprises
- Sleep better at night knowing that by maintaining simple asset allocation you don’t need to make radical changes and can trade less—reducing your risk and anxiety level
- Plus your taxes are easier to manage too!
What benefits do you get from keeping it simple? Share your comments in the section below
Same, Same But Different
- “Simple Investing/Easy Investing” While the first is possible; the second is nonexistent
- “Great company/Great stock” The first does not make the second, and the second doesn’t necessarily mean the first
- “Timing the market/Time in the market” The second will empower your compounding interest, while the first will prevent it
- “Quoting Warren Buffett/Acting like Warren Buffett” Many investors do the first, but few achieve the second
Looks Can Be Deceiving
- The “efficient frontier” is a set of portfolios optimized to offer the highest expected return for a certain level of risk or the lowest possible risk for a set expected return
- Once the efficient frontier is determined, the idea is that you can match your level of risk to the best portfolio for you
- But the efficient frontier line increases in volatility as it moves up and right across a graph, making it less attractive then it may seem at first to choose the highest-performing portfolio
What Will Be, Will Be
- While everyone is attempting to predict the end of the bull market, there is actually no reliable formula, strategy or machine that can possibly calculate it
- True, there are people who may accidentally predict the turn just right—but this is pure luck, and their fame never lasts long
- And they will continue to try and achieve the impossible again and again for the high of it—steer clear of these doomsday criers and stay away from the media hype by training yourself to ignore the noise
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.
Anything you would like to discuss about this week’s top 5? Do you have another favorite that isn’t mentioned here? Feel free to add it below. Let’s start a discussion in the comments section!
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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.