Evidence-Based Investing (and why all-time highs DON’T matter)

Evidence-Based Investing (and why all-time highs DON’T matter)

by George Holland on August 25, 2017 The All-Weather Investor

The first headline below recently proclaimed that stocks have hit another “all-time high”. Just three days later, the second headline confirmed why this happened: the economy is healthy. So, while there may be concerns about valuations and all-time highs, we should not only expect all-time highs to come on a regular basis, but we really want that to happen.

Remember that the stock market is ultimately a reflection of what is happening in the economy. If the economy is growing, stocks will rise in value, and, yes, will hit one all-time high after another. In fact, since September of 1954 (the month and year Bo was born) there have been well over 1,000 all-time highs in the market. That is what makes investing a worthwhile endeavor.

Now, this does not mean that the market always goes up. We know that does not happen. There can be some rough patches along the way. But making investment decisions based on headlines is why the average investor, over time, does not even come close to performing as well as the overall market. Why? Emotions and misinterpretations. We can allow fear and greed to prompt us at the wrong times to enter and exit the market, and we can use information in the wrong way, often to suit our emotions.

A better way is to follow what we call an evidenced-based approach to investing. Simply put, this involves looking at the facts over a long period of time and formulating an approach that suits your appetite for risk. Then, and this can be most difficult, stick with the plan!

This is how we approach investing. Our portfolios combine time-tested strategies along with the discipline needed to carry them out. Additionally, we keep a close eye on the economy, and, with the help of our BCM Market Risk Model, we adjust our portfolios when there is compelling evidence to do so.

For more information on our approach to investing and financial planning, please give us a call at (337)233-7758 or email us at info@billeaudcapital.com