At Beaird Harris, one of our primary goals is to provide a successful investment experience. That means more than considering investment returns. It means offering peace of mind knowing that a transparent approach backed by decades of research is powering every decision. The goal is to help people be prepared, so they can stick with their plan.
In most endeavors, there are things you can control and things you can't. That's true in life. That's true in business. That's true with investing. The good news about investing is that markets have rewarded investors over the long term. But over the short term—as anyone who's paid attention to markets knows—markets go up and markets go down. We thought it would be helpful to share some observations about what we think it takes to have a good experience.
Things You Can’t Control
THE RANDOM PERFORMANCE OF TRADITIONAL MONEY MANAGERS
Few things have been studied as extensively as the performance of professionally managed funds. While the results indicate that some managers have good track records, the number of managers that can successfully pick stocks are fewer than you’d expect by chance. So, why even play that game? You don’t need to.
What does that mean to investors? It means that even after analyzing all the data, you can’t separate skilled money managers from lucky ones. And if you can’t identify superior managers after the fact, how can you identify them in advance? Based on the overwhelming evidence, there is no magic to investing.
THE UNCERTAINTY OF MARKETS
Throughout their lives, people must continually deal with uncertainty and make choices—what school to attend, what career to pursue, where to live, and so forth. You make these decisions without knowing the outcomes. You look at all the possibilities, and then you decide.
Much of the financial services industry is geared toward making people think they can eliminate uncertainty in investing. However, the future is unknowable. The best approach to dealing with uncertainty is to make informed choices, adjust as your needs and objectives change, and be comfortable with the range of possible outcomes.
Things You Can Control
DEVELOPING AN INVESTMENT PHILOSOPHY YOU CAN STICK WITH
A philosophy serves as a compass to guide you through turbulent times. When you’ve got a compass, it doesn’t take drastic directional changes to find your way. Small adjustments are all you need to stay on course.
During the Global Financial Crisis, the US stock market was down more than 50%, which seems to happen about once every generation. A lot of people were stressed out by the uncertainty, so they cashed out. That locked in their losses. The market, as it turned out, rebounded and some of those people who got out of the market may have to wait decades to get back to where they were. It’s unfortunate they didn’t stick it out so that they could have better weathered the storm.
TRUSTING YOUR STRATEGY AND BEING PATIENT
Trust involves many different parts. To trust markets, you must understand how they work, which means having a source of reliable knowledge. The best source is scientific research, such as our evidence-based approach to investing, not opinions and hunches.
Investing is a dynamic process and a lifelong journey. It’s having a philosophy you can stick with, considering the range of possibilities, and adjusting along the way. Stay disciplined, control what you can control, and keep a long-term view on your destination so you can focus on what really matters – living a happy, healthy and meaningful life.
Attached you’ll find our newest brochure, The Keys to a Good Investment Experience. The principles described within will help you better react to market events, even when those events are globally significant or when, as some might suggest, a paradigm shift has occurred, leading to claims that, “it’s different this time.” This brochure was written for investors at all experience levels and can be read and understood in just one sitting.
Adapted from The Keys to a Good Investment Experience by David Booth, Executive Chairman and Founder of Dimensional Fund Advisors LP.. Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission. Past performance is no guarantee of future results. There is no guarantee investment strategies will be successful. Investing involves risks including possible loss of principal. nvestors should talk to their financial advisor prior to making any investment decision. There is always the risk that an investor may lose money. A long-term investment approach cannot guarantee a profit. All expressions of opinion are subject to change. This article is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services.
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Beaird Harris Wealth Management, Inc.), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Beaird Harris Wealth Management, Inc. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Beaird Harris Wealth Management, Inc. is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Beaird Harris Wealth Management, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request.
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