A Different Way to Invest - Old Peak Finance

A Different Way to Invest

August 18, 2016

2011_what history teaches

A Different Way to Invest

August 18, 2016

We attach a set of slides (find them here) that describes the issues you face in investing, and what we believe is the best approach.  We did not create this philosophy or the slides. They come from our preferred fund manager, Dimensional Fund Advisors. The key points:

  • Although there is risk to investing, there is also risk to not investing. Specifically, if you keep your money in cash, history suggests you will lose purchasing power.
  • In the past century, stocks and bonds have generated attractive returns for long-term investors.
  • People follow a variety of investing philosophies. Many of them lack scientific underpinning, relying instead on the media or emotion.
  • Academic research has taught us important lessons. First, the markets are highly efficient. Second, it is hard to beat the market consistently by picking individual stocks or predicting when the market will rise or fall.
  • But academic research also concludes there are characteristics of stocks that predict long-term returns. For example, over the last century, small stocks have had higher returns than large stocks.
  • Even though the stock market is unpredictable, and investor can control certain things.  These include expenses, diversification and your emotions.
This article is not intended to provide tax, legal, accounting, financial, or professional advice. Readers should seek advice from qualified professionals who can review their specific circumstances. Old Peak Finance endeavors to provide information that is accurate and current. However, we cannot guarantee that this information has not been outdated or otherwise rendered incorrect by new research, legislation, or other changes. Old Peak Finance has no liability or responsibility to any individual or entity with respect to losses or damages caused or alleged to be caused, directly or indirectly, by the information contained on this website.

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