AVOID THE UNDERPERFORMANCE TRAP Investors chase performance: buy when funds are hot and sell when they cool off How to avoid the underperformance trap? Invest with a fund manager who suits your investment style. Don’t chase performance Buy incrementally
Action Point
MAKE SURE YOU HAVE SOME “BORING” INVESTMENTS IN YOUR PORTFOLIO
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PUT SOME OF YOUR INVESTMENTS ON AUTOPILOT
PUT SOME OF YOUR INVESTMENTS ON AUTOPILOT THE TARGET-DATE FUND APPROACH: > Rebalance between stocks and bonds > Buy when prices drop > Sell when prices rise Takes the emotion out of investing
CONSIDER QUANTS
CONSIDER QUANTS Consider adding mutual funds run by reputable and leading edge quantitative research and strategy firms. Two masters of the art: – Cliff Asness of AQR Capital Management – Andrew Lo of MIT and AlphaSimplex Group
AVOID INVESTMENT LOSSES
AVOID INVESTMENT LOSSES Avoid Investment Losses Rules: – Buy quality companies selling at deep discounts – Invest with shareholder friendly managers – Keep some insurance in the form of cash and gold for portfolio protection
DON’T BE AFRAID TO INVEST IN YOURSELF
You are the best investment you can make!