Investment advice runs the gamut in the known universe of finance. Some of it’s good, some of it’s less so, but the majority of it is just plain misguided if not detrimental to the long-term interests of investors. It’s an old story, but it’s also a perennial, and therein lies the problem for most people trying win (or at least not lose) in the money game.
The central challenge for the average investor, perhaps even the average institutional investor, is that the global capital markets are rife with complication, short-term noise, nuance and lots of trap doors. Adding to this burden is the fact that much of what passes as investment intelligence is anything but, mainly because it lacks perspective and basic understanding of the essential business of portfolio design: risk management. There are simply too many “experts” running around dispensing advice to buy this, avoid that and otherwise recommend that investors engage in an ill-advised effort to second-guess market prices at every turn.
Yes, there are some who can beat markets, but it’s the rare individual investor who excels in picking securities across multiple asset classes. We take a different view in the monthly issues of The Beta Investment Report. Instead of starting from the belief that we have full clarity on the future path of risk and reward for the global capital and commodity markets, we assume that a fully diversified portfolio of all the major asset classes, weighted by the market values, is a robust benchmark from which to begin analysis and ultimately tweak Mr. Market’s passive allocation to suit our financial needs.