Much of the investment industry has been built on an illusion: that by investing actively it is possible to beat the market. However, the math is simple: corporations generate profits, which in principle are available directly to their shareholders. Paying someone to continuously buy and sell stocks doesn’t increase the profit pie. In fact the opposite is true: the more the asset management industry takes, the less the investor makes. The best route to a sound financial future is to stick to the three simple investment truths:
- Discipline: Control your emotions by having the discipline to stick with your investment plan at all times.
- Risk management: Manage complexity and uncertainty by diversifying across and within asset classes.
- Efficiency: Minimize costs and taxes.
By pooling our assets with other families and entrepreneurs, we have created the scale to access institutional solutions, which decreases those costs we cannot avoid and helps lower taxes. This benefits everyone involved and will put the investment odds in your favor.
Our investment philosophy is described in more detail in “The Investment Illusion”, which we first published in 2009