How Evidence-Based (EB) investing is different from traditional active (TA) investors.
Evidence-Based Investing incorporates long-term market history, peer-reviewed academic research, practical application and patient participation in the market.
Traditional active investing attempts to forecast the market over a short-term, relies on “expert” opinions, and at times resembles speculation.
EB investors understand that short-term market changes are unpredictable, therefore, they ignore the “noise”. TA investors believe they can successfully predict the next market move based on the breaking news and attempt to make trades ahead of the market.
EB investors know that time is on their side and they allow their investment plan to grow over time. TA investors feel a constant sense of urgency to make the right move in order to beat the market.
EB investors are guided by Nobel-prize winning academic research. TA investors act on the latest “expert” opinions, which can be subjective and often influenced by the “sponsoring” company or the industry.
EB investors define success as the achievement of their personal financial goals. TA investors view success as outperforming their neighbors.
EB investors manage risk and diversify away from concentrated positions. TA investors are willing to increase stakes in certain positions disregarding the risk in hopes of achieving higher return.
EB investors focus on minimal trading, they understand that trading reduces their returns. TA investors choose to disregard the trading cost, commissions and taxes.
EB investors aim to capture higher expected returns by tilting exposure to key “factors”, such as company size, value and profitability; without slavishly adhering to an index. They structure portfolios according to time-tested academic evidence, their personal goals, risk tolerance and risk capacity. TA investors focus on beating the market through stock picking and market-timing.
Evidence-Based Investing incorporates long-term market history, peer-reviewed academic research, practical application and patient participation in the market.
Traditional active investing attempts to forecast the market over a short-term, relies on “expert” opinions, and at times resembles speculation.
EB investors understand that short-term market changes are unpredictable, therefore, they ignore the “noise”. TA investors believe they can successfully predict the next market move based on the breaking news and attempt to make trades ahead of the market.
EB investors know that time is on their side and they allow their investment plan to grow over time. TA investors feel a constant sense of urgency to make the right move in order to beat the market.
EB investors are guided by Nobel-prize winning academic research. TA investors act on the latest “expert” opinions, which can be subjective and often influenced by the “sponsoring” company or the industry.
EB investors define success as the achievement of their personal financial goals. TA investors view success as outperforming their neighbors.
EB investors manage risk and diversify away from concentrated positions. TA investors are willing to increase stakes in certain positions disregarding the risk in hopes of achieving higher return.
EB investors focus on minimal trading, they understand that trading reduces their returns. TA investors choose to disregard the trading cost, commissions and taxes.
EB investors aim to capture higher expected returns by tilting exposure to key “factors”, such as company size, value and profitability; without slavishly adhering to an index. They structure portfolios according to time-tested academic evidence, their personal goals, risk tolerance and risk capacity. TA investors focus on beating the market through stock picking and market-timing.
