Our investment philosophy at Integrity Wealth Management is based on decades of academic research paired with real-world trading execution.
We understand that no two people lead the same lives, and each holds different aspirations in life. So while each financial plan is personalized to your unique situation and goals, we ask each of our clients to embrace the below principles in order to have the best chance at success in investing
Embrace Market Pricing
The market is an effective information-processing machine. Each day, the world equity markets process billions of dollars in trades between buyers and sellers—and the real-time information they bring helps set prices.
Don’t Try to Outguess the Market
The market’s pricing power works against mutual fund managers who try to outperform through stock picking or market timing. As evidence, only 14% of US equity mutual funds and 13% of fixed income funds have survived and outperformed their benchmarks over the past 15 years.
Resist Changing Past Performance
Some investors select mutual funds based on their past returns. Yet, past performance offers little insight into a fund’s future returns. For example, most funds in the top quartile (25%) of previous three-year returns did not maintain a top-quartile ranking in the following three years.
Let Markets Work
The financial markets have rewarded long-term investors. People expect a positive return on the capital they supply, and historically, the equity and bond markets have provided growth of wealth that has more than offset inflation.
Consider the Drivers
Academic research has identified these equity and fixed income dimensions, which point to differences in expected returns. Investors can pursue higher expected returns by structuring their portfolio around these dimensions.
DIMENSIONS OF EXPECTED RETURNS
- Market (Equity premiums – stocks vs. bonds)
- Company Size (Small cap premium – small vs. large companies)
- Relative Size (Value premium – value vs. growth companies)
- Profitability (Profitability premium – high vs. low value comparison)
- Term (Term premium – longer vs. shorter maturity bonds)
- Credit (Credit premium – lower vs. higher credit quality bonds)
Practice Smart Diversification
Holding securities across many market segments can help manage overall risk. But diversifying within your home market may not be enough. Global diversification can broaden your investment universe.
Avoid Market Timing
You never know which market segments will outperform from year to year. By holding a globally diversified portfolio, investors are well positioned to seek returns wherever they occur.
Manage Your Emotions
Many people struggle to separate their emotions from investing. Markets go up and down. Reacting to current market conditions may lead to making poor investment decisions.
Look Beyond the Headlines
Daily market news and commentary can challenge your investment discipline. Some messages stir anxiety about the future, while others tempt you to chase the latest investment fad. When headlines unsettle you, consider the source and maintain a long-term perspective.
Focus on What You Can Control
A financial advisor can offer expertise and guidance to help you focus on actions that add value. This can lead to a better investment experience.