- How you allocate your investment capital across the different asset classes is by far the biggest determinant of portfolio performance. Academic research shows that more than 90% of the long-term performance of an investment fund, is determined by its asset allocation. Market-timing and individual stock selection are shown to have been unable to produce enough value to overcome the associated operating expenses and transaction costs of active management. Stock-pickers take note!
- Stop thinking that you can second guess the market. All the news, good and bad, is already reflected in the market price. Also, the probability of you being consistently smarter than the collective knowledge of all other market participants …. well, let’s just say that it is improbable. Empirical research has found that even professional fund managers who do this for their day job have real trouble beating the market consistently. And most don’t.
Sorry if we are sounding like a broken record here but these are the fundamentals of a good investment strategy ..... applying them provides the highest probability of a successful investment experience.Image: FreeDigitalPhotos.net