Monday, November 11, 2013

Keep it Simple

From Jim Parker, VP, DFA Australia LTD

Interesting Links from the Web

In most areas of life, the harder we try and the more work we put in, the better the result. Success as a long-term investor is different.

Generally, in this area, the closer you study the form guide and the more active you are in monitoring your portfolio, the lesser your chances of success. So in this week we celebrate the virtues of simplicity.

These articles that reinforce a patient, disciplined approach to money.

This is a story of two individuals—one a poorly educated orphan who lived simply, bought a few stocks in her youth and then forgot about them; the other was a highly credentialed MBA, active investor and finance executive. Their respective investment outcomes tell us a lot about the link between advanced financial education and investment outcomes.

We’re overloaded with information in our lives. How are we supposed to keep up with it all? The simple answer is we shouldn’t even bother trying. Following the news is fine, but acting on headlines often leads us to responding to stale information. Better to focus on the underlying signal and ignore the noise. This article tells you how.

Legendary investor Warren Buffett has a way of cutting through much of the technical claptrap around investing to the underlying truths. In this article, the Berkshire Hathaway chairman boils down his accumulated wisdom to three simple ideas that anyone can apply.