What Is Evidence-Based Investing?
(Hint: It’s the Evidence That Counts)
How Do Traditional Active (TA) and Evidence-Based (EB) Investors Differ?
THEY SEE THE FUTURE DIFFERENTLY
TA investors believe they can successfully predict when and how to trade on breaking news.
EB investors understand near-term market swings are unpredictable; they ignore the “noise.”
THEY WORK ON DIFFERENT TIMELINES
TA investors feel a sense of urgency to make the “right” calls to beat the market.
EB investors assume that time is on their side; they give their plan time to grow.
THEY ARE GUIDED BY DIFFERENT DETERMINANTS
TA investors act on “expert” opinions (which are vulnerable to biases, blind spots and changeable conditions).
EB investors are guided by peer-reviewed academic inquiry (for “steady as she goes” resolve).
THEY DEFINE “SUCCESS” DIFFERENTLY
TA investors define success as outperforming others or making a lot of money.
EB investors define success as being able to comfortably fund their personal financial goals.
THEY USE RISK DIFFERENTLY
TA investors don’t distinguish between market risks (factors that are expected to yield extra returns) and concentrated risks (which just add more risk).
EB investors manage market risk factors (and their expected returns) and diversify away concentrated risks.
THEY CONSIDER COSTS DIFFERENTLY
TA investors focus on cleverly timed trades over the costs, commissions and taxes they incur.
EB investors focus on minimal trading, understanding that the costs involved are among the biggest drags on their end returns.
Bottom Line …
EVIDENCE-BASED INVESTORS APPROACH INVESTING DIFFERENTLY
TA investors try to beat the market through clever stock-picking and market-timing.
EB investors participate in the market to earn expected long-term returns according to time-tested academic evidence, their personal goals and their individual risk tolerances.
That’s why, when it comes to your time, your money, your future
AND YOUR FAMILY … we choose EVIDENCE-BASED INVESTING.
To Learn more about our Evidence-Based Investment Philosophy Click Here