Your Next Step We have now arrived at the conclusion of our 12-Step Journey. Along our path, we have brought to light the detrimental impact our own emotions and behaviors can wreak on our investments. We have taken a brief walk through the milestones of financial science and been enlightened by a group of academic legends who paved the way by contributing research that facilitates our ability to better understand risk, return, and the collective wisdom of people and markets. We have crossed the path of some fallen stars who provide a cautionary lesson on why we should primarily respect the marketâ€™s uncanny ability to spontaneously price all known information and to willingly accept that the current price is the best estimate of a fair price. We have been challenged to understand the futility of blindly chasing after winning fund managers, knowing their recent hot performance is a function of luck, not repeatable skill. We have learned the deleterious results that come from attempting to predict the future performance of markets, sectors, or styles and the erosive costs associated with this speculation. We have explored the probability of outcomes and have been guided to an understanding of how and why risk and return walk hand-in-hand. We have traveled backward in time to learn that the travails of today are not so dissimilar from those of history and that the precise risk experienced in the past will never be the same, but the ability of a free market to price those risks will be the same. Global capitalism has continued its onward march, allowing
Published on Jun 1, 2015
This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...