Research, emotions and your investments
Every year, the research shows that the average equity fund investor under performs the average equity fund by something like 40%. If the investor were not part of the investment, the investor's accounts would likely be much larger in size. An investor might hold on to even the most lousy mutual fund and do better than most of his brilliant friends.
Year in and year out, the research does not bode well for us humans. Basically, the academic research shows that removing emotions from the buy/sell decision helps increase the likely return. Removing all emotion, all the time, is sociopathic behavior; it's no wonder real people don't do investments well. We actually care, a lot, and often!
Here, we use a sophisticated process that is both quantitative and qualitative.
Our quantitative approach to investing is patented. The preponderance of evidence shows that a value-approach to investing, one that focuses on buying investments at discount prices, provides long-term results. Another well-studied "factor" of investments is that smaller companies likely have a better chance of being misprinted than large companies. So these two factors, plus many others, are part of the quantitative decisions we make.
For a more complete, and interesting, understanding of the buy decisions we make, consider attending our upcoming Lunch & Learn event on May 16th, featuring Dr. Tom Howard of Athena Invest.
The qualitative decisions that we make also remove the emotions from the investment decision, as best we can. We look for managers who have what we call "a sustainable edge." We look for managers who are consistent. We look for managers who do not over-diversify but are concentrated. Again, this set of decisions is aligned with academic research. Using a proprietary, six-step research process, we focus the universe of possible investments into a solar system; and from this much smaller set, our investment committee makes an asset allocation on behalf of our clients.
Using both a patented quantitative and proprietary qualitative process, our clients gain access to sophisticated investment decisions, and we can focus our journey on long-term, real-life financial goals.