Without a cogent investment philosophy, it is easy to let emotions become the driving force behind financial decisions. We strive to guide clients towards a simple philosophy of investing “on purpose, for a purpose”. We strongly believe that markets work and, while not “perfectly efficient”, the markets reflect the collective wisdom of millions of participants.
The juxtaposition of data and emotion creates an interesting starting point for understanding the importance of having a single philosophy. A veritable mountain of research and data support the framework of “the markets work” philosophy. The reason everyone doesn’t adopt this strategy, however, is their emotions get in the way. A recent article in The Wall Street Journal titled “Actively Managed or Index Funds? Why Not Both?” is emblematic of many who think it is plausible to essentially have no philosophy.