We’ve long been believers that investor education is an essential component of our relationships with our clients, so we’ve continually challenged ourselves to make the tenets of our philosophy as easily understood as they can be. Below you’ll see the most basic 5 points. Master these, and you’re on your way to a high level of financial sophistication.

1: Markets Are Efficient
Public information is of little fundamental value. New information is so quickly incorporated into asset prices that use of this knowledge cannot be expected to consistently yield superior risk-adjusted returns.

2: Risk and Expected Reward Are Related
Investors who expect or need to achieve higher returns must accept the associated risk. Equity-like returns do not come without commensurate risks. There is no promise of high returns without high risk.

3: Diversification Works
Global diversification across a variety of imperfectly correlated asset classes is the most effective way to reduce risk. Diversification is always working, whether we are pleased with the immediate results or not. Diversification should be thought of as the equivalent of buying insurance against having all of your investment eggs in the wrong basket.

4: Markets Are Unpredictable in the Short Run and Even in the Long Run
In the long run, we expect that equity markets will rise more than fall. Individuals who correctly predict short-term market movements should likely attribute their results to luck rather than skill.

5: Discipline Is Key to Successful Investing
For far too many investors, the variable that ultimately determines the results of their portfolio is not investment returns but investor behavior. Emotions can lead investors to make poor decisions at the wrong times. It is easy to remain disciplined during bull markets. However, it is far more important to do so in bear markets and avoid the human propensity to sell at market bottoms.

Summary
No matter where your plan goes, we will continue to place the utmost importance on evaluating risk tolerance, building a globally diversified portfolio, and implementing regular, disciplined rebalancing techniques. Having such knowledge changes the way you approach investing.

For years we have used books to tell our philosophical story. If investors want to know what the academic evidence says about investing, we have more than a dozen different options in stock.

Larry Swedroe, who sat down to discuss his latest book with Matt recently (view the video here), has written 14 books over the past 16 years. Our collection ranges from simplistic to highly technical, but one thing is missing: a book we’ve penned ourselves.

That’s about to change!

I’m excited to tell you that I’ve been working on a book for the last five months. We can’t say much more at this point, but have no fear: it won’t be long, it won’t be boring, and it won’t be something that’s been done before. Most importantly, it will help others Take the long view!

Watch this blog and our social media channels for details as we share more over the coming months.

Larry Swedroe, author and Director of Research for The BAM ALLIANCE, and Matt Hall, President of Hill Investment Group, discuss Larry’s latest book: Think, Act, and Invest Like Warren Buffett on February 5th, 2014 at the Saint Louis Club in St. Louis, MO. Nearly 70 guests had the opportunity to learn about why Larry wrote the book, hear some key lessons of investing, and ask questions.

Correction: Larry’s example about commercial real estate and defaults is off by one year. It happened in 2008-2010 rather than 2009-2011.