Relying on modern portfolio theory, proven by Nobel Laureates and years of empirical results, Sharper Granite secures the financial future for many individuals. We help clients achieve their financial goals by constructing and managing fundamentally sound investment portfolios customized around each client’s unique life story. Using advanced modeling tools, coupled with a wealth of data, we provide reliable insight for planning and projecting their future. We deliver customized, high-touch services for protecting and growing wealth. We pride ourselves on developing deep relationships that allow us to know our clients as well as we know the market.
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Successful investing takes time, discipline and patience.
Warren Buffett
Discover the top ten ways successful investors
generate consistent returns over time.
The U.S stock market has been an engine for wealth creation throughout the past century. This is especially true when investors are mindful of how markets work, what strategies deliver success, and what to ignore. So, how exactly do successful investors approach the markets? Below we highlight ten ways any investor can create a better investing
experience and generate consistent returns over time.
The market is an effective information-processing machine. Millions of participants, including company insiders and analysts whose job is to know everything about a company, buy and sell securities every day. The real-time information they bring sets prices, instantly and accurately. Outside stock buyers should
ask themselves if they know something more than all of these insiders and analysts combined, because their combined knowledge is embedded in the price.
The market's pricing power works against mutual fund managers and individuals who try to outsmart other participants through stock picking or market timing. As evidence, over the past 15 years only 19% of active U.S. equity mutual funds have outperformed their benchmarks, and 58% of these funds do not even exist
anymore. William Sharpe received a Nobel Prize in 1990 for proving mathematically what fund data shows us each year -- most actively managed money must trail the indexes due to frictional trading costs.
Some investors select mutual funds based on past returns; however, past performance is a poor indicator of future results. Only 25% of equity funds beat their benchmarks over the period 2000 – 2009. Then, only 28% of these continued to outperform from 2010 – 2014. Even Morningstar, which produces the mostwidely followed fund “star-ratings,” cautions against using their ratings, as 4- and 5- star funds have no better chance of future outperformance than 1- and 2- star funds.
It is impossible to know which sectors will perform best year-to-year. Even if you could skillfully interpret future corporate earnings or the world economy, you would need to do so better than the combined abilities of other sophisticated investors. No one has ever proven the ability to repeatedly profit by market timing. Holders of a well-diversified portfolio over time are positioned to capture returns wherever they occur.
The financial markets have rewarded longterm investors. Investors expect positive returns on the capital they provide, and historically, equity and bond markets have provided asset growth that has more than offset inflation. Equity markets have proven to be the best-returning asset classes over long time periods.
Academic research from Eugene Fama (Nobel 2013), Harry Markowitz (Nobel 1990), and William Sharpe (Nobel 1990), has identified the following stock and bond factors which are the predictors of expected returns. These factors are pervasive around the world and persistent over time. Exposure to these factors predict over 90% of diversified portfolio returns. Sharper Granite strives to cost-effectively capture these factors in portfolios.
The financial markets have rewarded longterm investors. Investors expect positive returns on the capital they provide, and historically, equity and bond markets have provided asset growth that has more than offset inflation. Equity markets have proven to be the best-returning asset classes over long time periods.
Academic research from Eugene Fama (Nobel 2013), Harry Markowitz (Nobel 1990), and William Sharpe (Nobel 1990), has identified the following stock and bond factors which are the predictors of expected returns. These factors are pervasive around the world and persistent over time. Exposure to these factors predict over 90% of diversified portfolio returns. Sharper Granite strives to cost-effectively capture these factors in portfolios.
Daily market news and commentary can challenge investment discipline. Some messages stir anxiety about the future while others tempt you to chase the latest investment fad. When reading, consider the source and whether there may be an agenda behind the message. Maintain a long-term perspective. If the experts are wrong most of the time (see #2), then what
advantage is likely to be gained by reacting to media stories which all can see?
Your financial advisor can create a plan tailored to your personal financial needs while helping youm focus on actions that add value. This can lead to better investment results and less anxiety about reaching your goals and objectives.
1. “Pursuing a Better Investing Experience” is written with input from Dimensional Fund Advisors. All data not footnoted is referenced to Dimensional Fund Advisors, 2015 2. From 1992 – 2009 for the three years following their 5-star rating, 39% of the 5-star funds beat their bench-marks, while 46% of the 1-star funds did so, “Higher ratings in no way ensure that an investor will increase the odds of outperforming a benchmark in subsequent years… 5-star funds actually show the lowest probability of maintaining their rating.” Chris Phillips, Francis Kinnery Jr, Vanguard, 2009. 3. “To be fair, I don’t think that you’d want to pay much attention to Morningstar’s star ratings either.” John Rekenthatler, Morningstar, 2000 4. Dalbar 2013 QAIB, 2013 5. Thinking Fast and Slow, Daniel Khaneman, 2005
