Twenty-first-century investing is all about predicting. But developing intuition about markets, asset classes and how they interact is too often overlooked if not ignored outright. That’s a mistake for strategic-minded investing, albeit a mistake that’s understandable in the crowd’s rush for quick and easy profits.
It’s hard to miss all the self-proclaimed seers running around espousing magic formulas and the three most-important investment gauges that insure big gains. Rarely do you hear of the dark side of these easy rules, such as the possibility that maybe, just possibly they’re byproducts of data snooping, survivorship bias and other gremlins that harass seemingly flawless assumptions.
It’s no surprise that limitations, blemishes and in some cases blatant fallacies are minimized/ignored in the three-minute talking-head interview or the personal finance column at your favorite financial publication. To be fair, some of this is simply an issue of time. Journalists and investment strategists can’t deliver a full accounting of prudent investing practices and concepts every time they opine on the subject du jour. As such, it’s easy to get a distorted view of investing by looking at any one post from, say, the CapitalSpectator.com and embracing it in isolation to my broader asset allocation analysis as outlined in my book and in my monthly newsletter.