The Evidence-Based Investor

Blogger wisdom

Posted by Robin Powell on June 12, 2017

It was a pleasure and an honour to be included in Tadas Viskanta’s latest series Blogger wisdom series. Tadas, for those who aren’t aware of him, is an excellent writer and content curator, whose blog, Abnormal Returns, is a go-to site for anyone looking for the latest news and views on trading, investing and personal finance.

Each year, Tadas asks prominent bloggers on those subjects a series of questions, and here are the ones he asked this time. My own answers are in italics, but please do check out the full set of answers in each case. Believe me, you’ll find some real pearls.

 

What do you know with a high degree of confidence about investing that does not require any statistical support?

Everyone who expresses an opinion about it is in some way conflicted. It’s usually to do with our business model or some other financial incentive; it’s sometimes about personal or professional pride, or trying to justify silly things we’ve said or done in the past. Always ask, Who’s saying this and Why?

 

If we had 1000 years of market data what kinds of things would get validated? What things would lack support in the data?

The equity premium, the value of diversification and the critical importance of a long-term perspective would all be validated. Pretty much everything else would not.

 

Ten years hence, what will we be embarrassed by that we were excited about in 2017?

That this is the year when active management finally gets its act together; and that the growing popularity of index funds will signal the end of capitalism as we know it.

 

If you could (magically) impart one piece of wisdom to all investors what would it be?

All investing entails risk, so accept it, embrace it even — but don’t take any more of it than you can afford to, than you need to or than you feel comfortable taking.

If I’m allowed a second:

Brokers and fund managers don’t need your charity. Your first priority is to ensure you don’t run out of money before you die. If there’s any left over once you’re on target, give it to people who really need it.

 

What’s the one thing investors should do to simplify their lives?

Stop kidding yourself that you can beat the market over the course of your investing lifetime — or that it’s worth the expense, time and stress involved in trying to. Diversify, capture market returns at very low cost and just rebalance every year.

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Robin Powell

A journalist and broadcaster, Robin Powell is a campaigner for positive change in the investing industry. He runs a communications company for the evidence-based investing sector called Regis Media.

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