Confirmation bias is the tendency to give more weight to evidence that confirms our beliefs, regardless of whether the information is true or not, than to evidence that contradicts our beliefs. This behavioral bias, coupled with our inherent propensity toward over confidence and optimism, can lead to poor investment decisions, high costs, missed opportunities and substantial volatility in an actively managed portfolio. Pay special attention to this brief video as it’s most definitely filled with time-tested wisdom.
In the world of investing, financial science and academic evidence have shown that building a portfolio that includes a tilt toward certain “factors,” such as smaller company stocks and value stocks, not only has increased long-term returns historically, but also can increase future expected returns.
In this brief, informative 3-minute video, you’ll learn more about why this can be so important.
There’s a whole range of behavioral biases that human beings are prone to that cause us to make poor investment decisions. One very common one is referred to as “availability bias.” Two of the most common types of availability biases are primacy and recency. They can tempt and lure us into making decisions based on the first thing we think of, or the last thing we heard. Examples might include: Did your first investment experience end poorly? Was the last stock that a talking head on CNBC recommended a tremendous success? Making decisions based on these types of biases is risky business when it comes to investing. In the following video, this bias is further discussed in a most practical way that will hopefully help you become a better investor.
Actively managed, "hot-performing" funds are regularly promoted by the media and many financial advisors. However, independent and peer-reviewed academic research clearly demonstrates that they rarely beat passive, low-cost funds in terms of net performance. And of those that do, they amount to less than one would expect by random chance alone. As you will observe in this brief video, most fund managers are actually "closet indexers," essentially nothing more than a very expensive index type fund. This is one of the biggest reasons why millions of investors are finally fleeing expensive, underperforming funds in favor of low-cost passively managed funds.
Would you ever even think of building a house without first having a blueprint? Of course you wouldn’t. And when it comes to achieving future financial security, nothing is more important than a goal-driven financial plan to help guide your investing and to help measure your progress. The following brief video offers substantive insights as to why a detailed financial plan is invaluable.
Research from S&P Dow Jones consistently shows that mutual funds that have outperformed their peers very rarely continue to outperform in the future. When news outlets and magazines make claims about the top funds to buy, they unfortunately are making most of their recommendations based on past performance. However, when it comes to the “best new funds,” past performance most definitely does not predict future performance. In fact, there is a better chance of rolling double sixes five times in a row than the top performing funds staying at the top of the leaderboard for five years.
To be successful as an investor, discipline and patience are paramount. And most often, if indeed you have a properly invested portfolio, this means understanding that doing nothing and leaving your portfolio alone is key. However, for most individuals this is difficult to do when one is continuously and dangerously bombarded with financial media 24 hours a day. In this brief video you will find extremely helpful insights as to why an investor’s single worst enemy is himself, and why acting on impulses can be destructive.
With the financial world rapidly becoming more and more complex every day, for many, developing a long-term relationship with a trusted financial advisor can be invaluable to you and your family. However, finding an experienced advisor who will always put your best interests first, isn’t quite as easy as it might seem. In this brief video you will find some very helpful things to remember when considering working with a fee-only financial advisor both now and in the years ahead.