The investing industry often talks about alpha.
In simple terms, alpha is a measure of outperformance compared to the market.
The evidence shows that fund managers are finding it increasingly difficult to generate alpha.
According to a book called "The Incredible Shrinking Alpha", there are 4 reasons..
Investing isn't supposed to be exciting.
But the financial media likes to make it seem so.
Why do so many people seem to seek excitement in investing?
There’s a couple of reasons.
Most investors still use actively managed funds.
In other words, they pay a fund manager to buy and sell the right stocks at the right time.
But, in general, how well do active funds perform?
The answer is worrying for investors.
Technology and investing have many parallels.
Both constantly improve.
Both evolve over time.
Newer versions constantly replace what was once seen as the best.
And both are passions of mine.
Some have even described one particular type of fund as having a ‘cult-like status’.
Fans of Apple can certainly relate to this.
It’s deeply ingrained in the human psyche that taking action is a positive thing.
And in many cases, it is.
But successful investing means doing exactly the opposite.
Even if that feels wrong.
And it will.
I recently discovered Safal Niveshak.
Meaning ‘successful investor’ in Hindi, it’s a blog created by Vishal Khandelwal, aimed at helping investors become intelligent, independent and successful.
His ideas about wealth and investing are interesting.
And I want to share one with you.
One which I think about almost every day…
Life is simple.
Why do we make it so hard?
There are many behavioural biases to overcome when investing.
One of the most common that investors are prone to?
Hargreaves Lansdown made billions by sending a 'best buy list' through people's doors.
My father loves it.
Look at the top performing funds and pick your winners.
Open the money pages of a paper or look at any of the financial press and chances are you’ll see articles about the best funds to buy.
Here’s why you shouldn’t be…