If you're indexing to the S&P 500, you're buying the most expensive names in the market.
— James O'Shaughnessy
Stocks change. Industries change. But the underlying reasons certain stocks are good investments remain the same. Only the fullness of time reveals which are the most sound.
It seems that the one thing that doesn't change is people's reaction to short-term conditions and their axiomatic ability to perpetuate them far into the future.
If you are an investor who's retired and hopes to live off the income that your portfolio is generating, then we would focus just on the dividend yield.
Fear, greed and hope have destroyed more portfolio value than any recession or depression we have ever been through.
We believe that people moving their portfolios to an overweight in bonds will be disappointed over the long-term and will significantly underperform an asset allocation that over-weights equities.
You'll get nowhere buying stocks just because they have a great story.
Industries that make goods and services that people have to buy, regardless of economic circumstances, are bound to do well whatever the economic conditions.
The average investor does significantly worse than a simple index... It's literally because of the way our brains are wired.
If you look back to the most spectacular blow ups in history, you can always tie them to a couple things: They were extraordinary complicated strategies that maybe even the practitioners themselves didn't understand, and they were overleveraged.
We continue to advise that investors remain committed to a patient, long-term outlook and that the best way to do well in stocks is to use a disciplined, time-tested strategy that has the benefit of empirically tested results over a variety of market environments.
Historically, we have always seen reversion to the mean. After stocks have had an unusually great 10 or 20 years, they typically turn in subpar results over the next 10 or 20, and after bad 10- to 20-year stretches, the next 10 to 20 tend to be above average.
If you're an investor who wants a little bit more from the capital-appreciation side of things, but still likes this concept of getting 'paid by the company,' then we would tell that investor to pursue shareholder yield.
By relying on the statistical information rather than a gut feeling, you allow the data to lead you to be in the right place at the right time. To remain as emotionally free from the hurly burley of the here and now is one of the only ways to succeed.
