Title: 9 Bits of Conventional Wisdom You Should Ignore - CBS News
Headings: 9 Bits of Conventional Wisdom You Should Ignore
9 Bits of Conventional Wisdom You Should Ignore
Content: Active management focuses on trying to manage the part of the investment experience we have no control over: the returns we earn from our investments. Unfortunately, there's only one person who knows where the market is going, and none of us gets to speak to that person and get an answer -- at least in this lifetime (and it won't matter in the next one). Thus, prudent investors focus on the things they actually can control: The amount of risk they take
Diversifying those risks across asset classes/risk factors, minimizing idiosyncratic risks
The structure of investment vehicles they use to implement their plan
Keeping costs low and tax efficiency high
Photo courtesy of runran on Flickr. Next: Past Performance of Active Managers Is Prologue
Past Performance of Active Managers Is Prologue The New Finance: " Past performance of active management isn't prologue." As presented in The Quest for Alpha, the overwhelming body of evidence -- be it on individual investors, mutual funds, pension plans, hedge funds or behavioral finance -- demonstrates that there's little to no persistence of performance beyond the randomly expected. Even 15 years or more of outperformance has been shown to be unreliable for indicating future performance.