Monday, April 21, 2014
We all know from personal experience that it typically does not pay to switch from one line to another—not at ticket counters, border crossings, airport security, or even at the grocery store checkout. Likewise, compelling data from the investment research company Morningstar show that nearly certain disappointment awaits the investor who hopes to generate market-beating returns by repeatedly moving from one investment strategy to another.
Many of us stubbornly believe that we can beat the market by developing “informed” views on a vast array of economic and financial variables—from economic growth, inflation, and interest rates to corporate earnings, commodity prices, and even threats of war (and indeed the entire set of international economic, political, and social developments that affect global financial markets).
The research, which this piece explores in greater depth, once again reminds us that a disciplined approach to investing that removes the noise, stays the course, and tempers emotion can help improve your odds of success.