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The Story of Investing


  1. Own Equities - Equities (Stocks) have historically outperformed Fixed Income (Bonds). They provide a risk premium that produces more returns for the investor over time, 100% of the time over a 20 year period. Dalbar, an industry research company who produces studies each year on investor behavior, has shown the average equity mutual fund is owned for only three years!
    Source: Quantitative Analysis of Investor Behavior, 2017, DALBAR, Inc.
  2. Diversify Globally - Diversification is the ownership of equities and fixed income across an array of different sized companies, in a multitude of industries, all around the globe. In order to properly diversify and achieve optimum correlation between asset classes, a portfolio could consist of over 12,000 holdings.
  3. Rebalance - Rebalancing is the systematic process of buying low and selling high particular asset class holdings in order to maintain a stated portfolio allocation between those asset classes. So if equities have increased in value and fixed income decreased, it would make sense to sell a portion of equities and buy a portion of fixed income. The converse holds true. Most people do the opposite, they buy more of what's increasing in value and sell the decreasing asset class.


  • The Efficient Market Hypothesis was postulated by Eugene Fama in 1965 – concluding that markets are inherently efficient, that all knowable information, public and private is included in the price of a security. He won a Nobel Prize for his work in Economics in 2013.

    Free Markets Work

    “In [a free] market at any point in time the actual price of a security will be a good estimate of its intrinsic value.”
    – Eugene F. Fama, “Random Walks in Stock Market Prices,” Financial Analysts Journal, September/October 1965.

    Beliefs Dictate Action


    • Focus on capturing market returns
    • Eliminate traditional investment strategies
    • Utilize asset-class or structured funds
    • Diversify prudently
    • Identify your risk tolerance
    • Work with a financial coach who shares your market belief and helps you pursue your investment objectives


    • Focus on active management
    • Pursue traditional investment strategies
    • Stay connected to multiple sources of financial information and read as much market information as you can; or
    • Work with a financial professional who shares your market belief and does the work for you
  • Modern Portfolio Theory

    Modern Portfolio Theory (MPT) is attributed to several Nobel Prize winning economists – Harry Markowitz, William Sharpe and Merton Miller.

    The three components of MPT are:

    1. Efficient Frontier
    2. Determinants of Portfolio Performance
    3. Asset Class Correlation

    Click on graph for larger view

  • 3 Factor Model

    The Three Factor Model was developed by Eugene Fama and Kenneth French, while both professors at the University of Chicago Booth School of Business, in an attempt to describe returns within portfolios. In doing so, the model allows investors to nearly eliminate stock picking, market timing and track record investing.
    *Charts are for illustrative purposes and are not intended to suggest a particular course of action or represent the performance of any particular financial product or security. Past performance is not a guarantee of future results.

    Click on graph for larger view

    Equities are riskier than fixed income.

    Small companies are riskier than large companies.

    High book-to-market (value) stocks are riskier than low book-to-market (growth) stocks.


  1. Attend Coaching: You are up against Wall Street – a giant with nearly unlimited resources to market and push its agenda on you and into your portfolio. Coaching helps you fight back and focus on the things that will move you closer to, not away from, your goals and dreams. You can do it – successful investing is within your grasp. Coaching will guide you to that end.
  2. Stay Invested: You are also up against yourself, your fears and anxieties. These are powerful. We acknowledge and respect them for they are trying to help. But try as they may, the thoughts of stock picking, market timing and track record investing - all of which play on your fears - will hurt you. You must stay invested and follow the three simple rules of investing based on three Nobel prizes. Coaching is imperative here. ….rules of investing based on Nobel prize winning economics.
  3. Help your fellow investor: In order to keep anything we must give it away – i.e share it. In sharing your investment philosophy you will deepen your conviction and understanding of why you are doing what you are doing with your money. The fruit of this is greater discipline and Financial Rest. Above all you will help your fellow investor on the same path.

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