Featured entries from our Journal

Details Are Part of Our Difference

Embracing the Evidence at Anheuser-Busch – Mid 1980s

529 Best Practices

David Booth on How to Choose an Advisor

The One Minute Audio Clip You Need to Hear

Category: Education

Happenings in the Evidence Based Investing World

Hill Investment Group likes to stay on top of the evidence-based investing world.  Below you will find three links to relevant and entertaining commentaries that have been shared with us.

Trio

Jared    |   Jason    |   John

  • Jared Kizer thoughtfully explains the Brexit and its effects, or lack thereof in this article on MultiFactorWorld.
  • Jason Zweig addresses the benefits of value and tilting in his Wall Street Journal article “Everything Is More Expensive Than It Looks”
  • John Oliver humorously describes the sad but true state of many actively managed retirement plans in his show Last Week Tonight on HBO.  Please know in advance, there is a bit of lewd language and subject matter in this clip.

Odds On Highlights

Odds On Book ServedOdds On is popping up in all kinds of places since it’s April 12th launch. Here are just a few highlights:

1. 800ceoread Business Bestseller

This influential business book site put out their bestseller list for the month of April and Odds On makes it to #11.

2. #1 Bestseller on Tadas Viskanta’s Abnormal Returns Book list for April and featured on the influential blog: Click Here

Tadas is esteemed among the highly technical investing crowd and his blog includes in its readership some the most respected thinkers and leaders of our industry.

3. YNAB (“You Need a Budget”) Podcast #221: Click Here

Jesse Mecham’s budgeting software ‘YNAB’ is well known among budgeting gurus and has an extremely devoted following.

4. Beyond 50 Radio Show: Click Here

Daniel Davis has hosted the Beyond 50 radio show for over 10 years and boasts syndication on over 150 podcast networks.

5. Robin Powell blog interview: Click Here

Robin is a communications expert and is leading the evidence-based investing movement in the United Kingdom. His regularly published videos are helping get the story out around the globe.

And if you haven’t posted your review of Odds On on Amazon.com, or if you haven’t yet read the bookvisit Amazon here.

Back to Basics – Defining Evidence-Based Investing

Needle in HaystackIt wasn’t that long ago that evidence-based investing was a radical idea that flew in the face of the Wall Street establishment. It started as an underground movement, slowly gaining popularity as select institutions and small firms took the plunge and clients gained trust in a new approach. The foundation of this new trend was based on the Efficient Market Hypothesis (EMH) formulated in 1960 by University of Chicago Booth School of Business professor Eugene Fama. The premise states that because financial markets are very efficient at processing information, breaking news, or data that might affect the value of a company’s stock or bonds, they will quickly incorporate it into the price of those assets.

The price of a stock or bond reflects all public information available to investors at any given time, so it’s not likely to find a truly overvalued or undervalued investment. This is a big shift in thinking from traditional approaches to investing, which touted the undervalued investment as a means to getting rich. But it’s a myth. News that assumes revenues are going to grow is available to everyone. So everyone will act accordingly and make the same purchases, reflecting in the stock price. Essentially, it’s a level playing field because everyone has the same information. “Beating the market” is an outdated concept.

The term efficient market is a bit of a misnomer, as it isn’t perfectly efficient. Once in a while an investment may actually be undervalued for a period of time, so a quick move before the rest of the market catches on may yield some benefit. But it’s highly unlikely that any given investor (professional or amateur) will be able to take advantage of such inefficiencies on a consistent basis. Outguessing the market is risky and investors get it wrong more often then they get it right.

Evidence-based investing has taken the betting out of the process, relying instead on sound strategies that reflect the realities of the market. Investing in funds similar to index funds that target different areas of the market is a way to harness the growth of the global economy. The investor’s unique circumstances and the right mix of small company stocks, large company stocks, international stocks, etc., will help determine the plan. The key is to stick with it and let the financial markets do their job. A lower rate of activity saves money on brokerage fees and taxes, not to mention that it’s less stressful than trying to keep pace with fluctuations and short-term market swings.

Investment trends and theories come and go, but using data to build better portfolios is simply good business. The evidence speaks for itself.

 

Featured entries from our Journal

Details Are Part of Our Difference

Embracing the Evidence at Anheuser-Busch – Mid 1980s

529 Best Practices

David Booth on How to Choose an Advisor

The One Minute Audio Clip You Need to Hear

Hill Investment Group