There’s something to be said for simplicity – especially the kind that takes powerful solutions and strips them to their applicable essence.
For example, consider the light bulb. Or the telephone. Or laparoscopic surgery. Understanding precisely how each of these works takes time, specialized study and skilled practice.
But it takes almost no time at all to appreciate how each enhances how we see, or hear or feel.
The same should apply to evidence-based investing: Some of the underlying intricacies may not be obvious at a glance, but the benefits should be.
Why is evidence-based investing recommended for your personal portfolio? The brief information below tells you why in a simple way.
(Hint: It’s the Evidence That Counts)
| Evidence-Based Investing | vs. | Traditional Active Investing |
| Long-term market history | Near-term market forecasting | |
| Peer-reviewed academic evidence | “Expert” opinions | |
| Practical application | Speculative venture | |
| Patient participation | Rapid reaction |
How Do Traditional Active (TA) and Evidence-Based (EB) Investors Differ?
THEY SEE THE FUTURE DIFFERENTLY
TA investors believe they can successfully predict when and how to trade on breaking new.
EB investors understand near-term market swings are unpredictable; they ignore the “noise.”
THEY WORK ON DIFFERENT TIMELINES
TA investors feel a sense of urgency to make the “right” calls to beat the market.
EB investors assume that time is on their side; they give their plan time to grow.
THEY ARE GUIDED BY DIFFERENT DETERMINANTS
TA investors act on “expert” opinions (which are vulnerable to biases, blind spots and changeable conditions).
EB investors are guided by peer-reviewed academic inquiry (for “steady as she goes” resolve).
THEY DEFINE “SUCCESS” DIFFERENTLY
TA investors define success as outperforming others or making a lot of money.
EB investors define success as being able to comfortably fund their personal financial goals.
THEY USE RISK DIFFERENTLY
TA investors don’t distinguish between market risks (factors that are expected to yield extra returns) and concentrated risks (which just add more risk).
EB investors manage market risk factors (and their expected returns) and diversify away concentrated risks.
THEY CONSIDER COSTS DIFFERENTLY
TA investors focus on cleverly timed trades over the costs, commissions and taxes they incur.
EB investors focus on minimal trading, understanding that the costs involved are among the biggest drags on their end returns.
Bottom Line …
EVIDENCE-BASED INVESTORS APPROACH INVESTING DIFFERENTLY
TA investors try to beat the market through clever stock-picking and market-timing.
EB investors participate in the market to earn expected long-term returns according to time-tested academic evidence, their personal goals and their individual risk tolerances.
That’s why, when it comes to your time, your money, your future, and your family…
ESCIENT FINANCIAL chooses EVIDENCE-BASED INVESTING.
What else can Escient Financial answer for you about evidence-based investing? Reach out or feel free to...
That’s why, when it comes to your time, your money, your future, and your family…
ESCIENT FINANCIAL chooses EVIDENCE-BASED INVESTING.
What else can Escient Financial answer for you about evidence-based investing? Reach out or feel free to...
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as investment, tax, or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Digital assets and cryptocurrencies are highly volatile and could present an increased risk to an investors portfolio. The future of digital assets and cryptocurrencies is uncertain and highly speculative and should be considered only by investors willing and able to take on the risk and potentially endure substantial loss. Nothing in this content is to be considered advice to purchase or invest in digital assets or cryptocurrencies.
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