6 Investing Lessons From March Madness
Filling out a bracket for the NCAA basketball tournament reminds me so much of investing because it balances expertise, future expectations, risk, and reward. Winning also requires a healthy dose of luck along the way.
There are six lessons from March Madness that we can apply to the world of investing.
To Add or Not To Add?
Each additional factor you add to a portfolio comes with a diminishing marginal benefit, which lowers the probability that the benefits will outweigh the costs. As a result, you must carefully weigh the expected net benefits versus the degree of uncertainty.
Confirmation Bias
There isn’t anything wrong with reviewing evidence that supports your investment philosophy, but a significant portion of your efforts should be dedicated to looking for evidence that conflicts with your way of thinking.
Assessing Risk Tolerance
Building the perfect portfolio doesn’t matter one bit if it doesn’t align with your willingness and ability to take risk. Evaluating your own risk tolerance is difficult for individuals because of the emotions that are intertwined with investing.
Simplify The Game
Investing is a zero sum game in which individual investors frequently end up on the losing side, but that doesn’t have to be the case.
Favorite Articles With Low Readership
One of the things you come to learn about writing is that some of your favorite work doesn’t generate the buzz you expect. Almost every writer has experienced this a few times, so I turned to the blogging community to get their thoughts.
2017 Annual Investment Review
Every year I address some of the most common client questions in a publication titled Annual Investment Review. Check out the 2017 issue here.
The Collective Knowledge of Financial Markets
Rather than compete against the vast knowledge of the world’s market participants, the vast majority of investors should harness the knowledge of markets and focus on things that can be controlled such as risk exposure, costs, taxes and investment behavior.
What’s The Biggest Mistake Investors Make?
What the biggest mistake investors make? Your favorite financial bloggers share their thoughts.
Invest or Pay Down Debt?
Should you pay down debt or invest Here are the 7 most important questions to ask to help you decide.
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Peter Lazaroff, CFA, CFP® is Plancorp’s Chief Investment Officer, a financial advisor, speaker, and author of the book Making Money Simple.
