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Discover the Power of Evidence-Based Investing | rockwealth

Discover the Power of Evidence-Based Investing | rockwealth

Investing: The Evidence - A leading documentary on evidence-based investing from rockwealth In this video, we explore the world of evidence-based investing and its benefits. You'll see how a disciplined approach to investing can lead to better long-term results. Join us as we dive into the research and data that support this approach. Don't miss out on this informative and eye-opening documentary from rockwealth. #Investing #EvidenceBasedInvesting Learn more at: Investing for the Future: - Investing is important to prepare for major expenses such as housing, weddings, funerals, operations, holidays, children's education, cars and most importantly retirement. - People are living longer and spending 20 years or more in retirement without a regular salary. - Historically owning shares in companies or equities has provided the biggest investment returns over the long term. 01:33 Investing in Equities: The speaker discusses how equities have historically provided higher returns than cash or bonds. Performance of Different Asset Classes - A team from London Business School found that over the long term shares are the runaway winner in terms of investment returns. - Between 1900 and 2016 cash delivered an annualised real return of 1%, bonds returned 1.8% but shares produced an average annual return of 5.5%. - The annualised real return on UK equities between 1967 and 2016 was even higher at 6.9%. 03:56 Active vs Passive Investing: The speaker explains active investing versus passive investing and why active investing can be a bad idea. Active Investing: - Active investing involves trying to beat a market by engaging in different strategies such as picking stocks, timing the market or selecting managers who will do one of those things. - Only a tiny proportion of active managers outperform over the long term after costs according to a study conducted by Professor David Blake at the Pensions Institute. Passive Investing: - Passive investing involves tracking the whole market rather than trying to beat it through active management. - Closet trackers are funds that claim to be actively managed but broadly track the whole market and are almost guaranteed to underperform after costs. - Active managers have to show conviction but they're just as likely to be wrong as they are to be right. 06:43 The Problem with Active Fund Management: In this section, the speaker discusses how most funds are just closeted trackers and how active management is a zero-sum game. Closeted Trackers: - About 70% of funds are just closeted trackers. - Only about 20% of fund managers could do better than them. - Skilled managers are extremely rare to find. 07:30 Zero-Sum Game: - Active management is a zero-sum game where for one manager to win, another has to lose. - It's become increasingly difficult for a single manager to outperform his peers consistently due to the mushrooming size of the fund industry. 08:43 Why Investors Continue to Use Actively Managed Funds: In this section, the speaker explains why investors continue to use actively managed funds despite evidence that only a tiny number of them actually beat the market. - The active fund industry is extremely lucrative and firms have huge budgets to spend on PR and advertising. - Financial intermediaries have done very well out of active management and therefore have little incentive to point out what a poor deal investors receive from it. The Rise of Passive Investing: - In this section, the speaker discusses passive investing as an alternative to active management and explains why it's becoming more popular among investors. 10:36 Passive Investing vs. Active Management: - Instead of paying for active management, investors are increasingly opting for index funds which aim to capture the returns of an entire market by tracking an index. - Passive investing should be called smart investing as it minimises the moving parts, decisions, and costs while maximising the chance of getting returns from capitalism. 11:27 - The Case for Passive Investing: - The random walk hypothesis and efficient market hypothesis support the case for passive investing. - A passive portfolio can go down just as well as it can go up, but smart investing is about minimising risks and maximising returns. ------- rockwealth 3 Imperial Square Cheltenham Gloucestershire GL50 1QB Phone: 01242 505 505 Email: Website:
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