A Repeatable Investment Plan


by Jeff C. Johnson

Larry Swedore's The Only Guide to a Winning Investment Strategy You'll Ever Need book

Many investors (and even many investment professionals) think it’s possible to reliably beat the market by timing the movements of stock prices. And they are always on the lookout for that “smartest guy in the room” who will consistently outperform the market indices.

To be clear, academic research reveals how very unlikely it is for this approach to succeed. It’s all part of the Efficient Market Hypothesis, as stated by Dr. Eugene Fama and supported by the research of many others.

Yes, it is possible to buy low and sell high through market timing and stock selection. Sometimes. But it’s not repeatable, and the big, quick gains that definitely can happen are often eventually offset by big, quick losses! After trading costs and taxes, most “active” managers trail the return of the broad market.

A long-term, repeatable investment process, based on academic research (not flimsy projections or guesses about the future) and crafted into a systematic approach, is what will work over meaningful periods of time.

I discovered such a process when I was working for a large, New York-based Wall Street firm. When I read Larry Swedroe’s The Only Guide to a Winning Investment Strategy You’ll Ever Need, it changed my professional life and it wonderfully impacted the work I perform for clients. (Today, Larry is a colleague of mine at Buckingham Strategic Wealth.)

Understanding, and sticking to, this philosophy for the long term (and by long term, I mean 20 years and more) can make a substantial difference for you, the people whom you love, and those who love you.

Do you have an evidence-based, repeatable investment process? Pick up a copy of one of Larry’s books on this or any topic and evaluate the logic behind the strategy.

Discovering a repeatable investment process is the fourth point of The Eight Points of Financial Confidence.