Barry Ritholtz's 10 principles of investing

https://ritholtz.com/2022/05/my-investing-philosophy-in-a-nu…

**1. Stock picking is exceedingly difficult:**
**2. Market Timing is even harder:**
**3. We are oblivious to our own cognitive shortcomings:**
**4. Behavior is the biggest determiner of investor returns.**
**5. Consistent average returns turn into above-average returns over time.**
**6. Don’t overlook tax alpha:**
**7. Fees matter a lot:**
**8. Use Tactical portfolios tactically:**
**9. Financial literacy requires constant refreshers:**
**10. Investing is simple, but hard:**

Each of these has an explainer paragraph at the link.

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“Consistent average returns turn into above-average returns over time.”

Don’t have time to read it right now, but will be sure to look it over later on.
I’ve seen #5 expressed from other good, long term investors.
And he makes some of the same points intercst makes consistently.

#5 probably makes a strong case for just indexing, and not trying to go for a
strategy such as is practiced on Saul’s board. The small cap/high growth strategy
will probably work out really well long term for those who can stomach the huge
downdrafts, but the majority can’t.

Ritholz makes a lot of sense.

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#5 probably makes a strong case for just indexing, and not trying to go for a
strategy such as is practiced on Saul’s board. The small cap/high growth strategy
will probably work out really well long term for those who can stomach the huge
downdrafts, but the majority can’t.

I’d say that indexing is a result of combining #1 and #5.

Picking stocks is hard, but not impossible. Folks over on Saul’s board appear willing to do the hard work of picking individual stocks. More power to them.

But doing that work strikes me as something close to a full time job. Those still in their working and saving years most likely already have a full time job. Taking on another job (stock picking) leaves no time at all for actually living life. The pressure would be to short cut the stock picking job, but that will almost certainly result in poor performance of the selected stocks.

Those retired from full time work have the time available to do the stock picking job. But many of them no longer want to spend the time which that job requires. Again, short cutting the stock job is the common result, leading to poor performance.

Either way, indexing with something like quarterly to annual reviews of the selected indices seems to be a good compromise between getting acceptable portfolio returns and time spent on the work of managing the portfolio.

–Peter

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