The most important question behind investing is WHY?
- Investing is only relevant in so far is it allow you to live the life you want to live most. Thus, your adviser needs to understand what your ideal life is based on past experience and future goals.
- Success of Your Plan is infinitely more important than returns or performance.
- One can focus on the short term OR the long term, but not both.
The difference between good and average investors is behavior.
- A good investor with an average portfolio will outperform an average investor with a good portfolio. Most people focus on the portfolio, and not the investor.
- There is ALWAYS a counterparty. This is key to understanding the game that is being played.
- Risk and return are two words for the same effect. We cannot increase or decrease either independently.
- Markets are "efficient", so patience is the only competitive edge that can investor can possess.
There is a science to investing.
- Portfolios should be driven by evidence and research, not by emotion and opinion.
- There is no predictive power in past prices; there is no reliable method of forecasting future prices.
- Investment science is "far-sighted". We can see distant outcomes clearly, but near ones are blurry.
Control what you can control.
- Low costs and taxes
- Careful asset allocation and thorough diversification
- Exposure to factors of higher expected return
- Long term focus and discipline