Markets Work

We believe that markets price securities so efficiently that it is not possible to systematically earn above-market returns by buying and selling based on currently available information like earnings reports, past performance, or economic data.

Markets around the world have a history of rewarding investors for the capital they supply. In the ever-expanding global economy, companies compete with each other for investment capital, and millions of investors compete with each other to find the most attractive returns. Together, they create movement of prices to fair market value. In other words, all available information is already reflected in the price of a stock, which means that only unknown and unpredictable information can change its price.

For an investor, this indicates that no one can determine reliably and consistently where the stock market is going. Therefore, it is a futile exercise to invest based on predictions and market outlooks. Since markets are efficient and consistently beating them is impossible, we construct our clients’ portfolios (and our own) with low-cost, passive funds. This allows our clients to “own” the market and capture market returns depending on their particular need, willingness and ability to take risk.

"Prediction is very difficult, especially if it's about the future". Niels Bohr

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