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Embrace Market Pricing
The market is an effective information-processing machine. Real-time information is factored into prices as billions of dollars are exchanged between buyers and sellers worldwide.
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Avoid Market Timing and Stock Picking
Decades of evidence has shown that the market’s pricing power works against fund managers who try to outperform the market through market timing or stock picking.
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Let Markets Work for our Capital
The financial markets have rewarded long-term investors. Historically, the equity and bond markets have provided growth of wealth that has more than offset inflation.
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Consider the Drivers of Returns
A wealth of academic research shows that expected returns depend on current market prices and expected future cash flows. Investors can use this information to pursue higher expected returns in their portfolios.
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Practise Effective Diversification
Holding securities across different market segments can help to manage overall risk. However, diversifying within our home market may not be enough. Global diversification can broaden our investment universe.
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Manage our emotions
Many people have good investment strategies for their portfolios but struggle to separate their emotions from investing. Markets will always go up and down. Reacting to current market conditions may lead to making poor investments decisions.
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Look Beyond the Headlines
Daily market news and commentaries can be quite challenging to our investment discipline – some stir anxiety about the future, whilst others tempt us to chase the latest investment fad. Look beyond the headlines, consider the source, and maintain a long-term perspective.
