Like many of  you I hate it when someone tells me I can’t do something. My last post can be taken, though not intended, as an admonishment of all those who are investing for themselves, by themselves. It was not meant to be so. Clearly, as an investment adviser I’m partial. I think investors should use competent advisers.  I have seen that most investor portfolio’s perform better  for people and their families as a result. I understand that there are of course exceptions; bad fits and incompetence are a real option out there when choosing an adviser with whom you can work.

However, if you choose to go it alone it is important that you choose to play a game you can win.  Opportunistically picking stocks by consistently finding mispriced securities that you, and only you, are able to recognise is a loosing game. It simply doesn’t work and brings in a high probability of dramatic under-performance. While random out-performance is possible, it is not probable.  Fortunately, there is a game you can win. It seems to me that a passive return to the markets in which you invest will outperform just about every other approach available to you. In his 2007 chairman’s letter to shareholders, (pg 19) Warren Buffet makes a similar point about “know nothings” winning. His conclusion is that the vast majority of investors would be much better off buying low cost index funds. I agree. If you want to improve your situation, that should be the starting point… the benchmark for other strategies that you are considering.