Drown out the Noise – You Are Smarter than You Think
I spent a couple days earlier this week at an investment conference. Whilst there, I was reminded of the volumes of empirical evidence supporting our investment philosophy. It was reassuring and affirming. Even though I’m “in the business,” I’m not immune to the noise that is everywhere. Talking heads on TV telling us which stocks are winners; newspapers telling us the sky is falling; co-workers telling us how great their investments are the greatest thing since sliced bread. These distractions are ever-present, and it takes true resolve to not be swayed by these externalities. Clients will often ask what we think of a particular event (How will Brexit impact me?) or security (Should I buy some Apple?) or perceived future risk (But what if Trump is elected?). These questions are relevant and valid, but they shouldn’t cause you to deviate from your long-term strategy.
The truth is, the most important factor in successful investing is having an investment philosophy you can rely on and adhere to, even during periods of volatility. Markets are unpredictable; they will continue to be so. The events will change, but the outcomes will continue to fall along a fairly consistent trajectory when examined with a long-term lens. I am not foolish enough to think I have more insight than the next investor. What I do know is that I trust an evidence-based approach that is rooted in decades of academic research. I’ll leave you with two quotes by two very intelligent individuals who can convey this message far more articulately than me:
“To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insight or inside information. What’s needed is a sound intellectual framework for making decisions, and the ability to keep emotions from corroding that framework.”
– Warren Buffet
“The idea that any single individual without extra information or extra market power can beat the market is extraordinarily unlikely.
Yet the market is full of people who think they can do it and full of other people who believe them…
Why do people believe they can do the impossible? And why do other people believe them?”
– Daniel H. Kahneman,
2003 Nobel laureate in Economics
Risk Warnings and Important Information
The above article does not take into account the specific goals or requirements of individual users. You should carefully consider the suitability of any strategies along with your financial situation prior to making any decisions on an appropriate strategy.