Evidence-Based Investment Factors
So, which factors appear to best explain different outcomes among different portfolios? In what combinations are these factors expected to create the strongest, risk-adjusted portfolios? What explains each factor’s return-generating powers, and can we expect those powers to persist?
Based on the academic answers to these practical questions, we typically mix and match the following factors in our evidence-based portfolios, varying specific exposures based on each investor’s personal goals and risk tolerances:
- The Market: Stocks (equities) vs. bonds (fixed income)
- Company Size: Small vs. large company stocks
- Relative Price: Value vs. growth company stocks
- Profitability: High-profit vs. low-profit company stocks
What would your best evidence-based investment portfolio look like? It depends on your personal financial goals; as well as your willingness, ability, and need to take on investment risks in pursuit of those goals. That’s where we come in, to structure the right mix for you, and help you navigate through the ever-distracting informational overload.
If you feel your current investment philosophy is not aligned with your long-term investment goals, I would love to discuss the benefits of evidence-based investing with you. Contact us today for a complimentary Get Acquainted meeting. We look forward to meeting you.