“Equity investing is about what could happen, not what has” – Michael Goldstein
We have highlighted on many occasions the three facets of investing that most impact performance: market participation, asset allocation, and cost. We can further segment costs into three areas:
Direct costs of management fees and investment vehicle fees that we attempt to contain through the use of low cost ETF’s.
The general and consistent underperformance of active stock selection techniques that we eliminate through the use of index-based investing.
The last, and potentially most impactful, cost is making the wrong decisions at the wrong time to enter or exit the market.