My Sunday Washington Post Business Section column is out. This morning, we look at two competing investment philosophies, Alpha & Beta.
The print version had the sort of misleading headline Be the guy with the calm and collected investing strategy — I much prefer the online version’s The best investment strategy for you? It’s the one you’re likely to stick with.
The column looks at how two pundits from competing of investing thought — Alpha and Beta — would answer a simple question Where will the Dow be in a year?
I hypothesize the answer by Alpha as follows:
“Our view is that the economy in the U.S. continues to _______, and we foresee _______ problems overseas ______. China is _______, and that has ramifications for the Pacific Rim’s ______. Greece is ______ in Europe. The commodity complex is causing _____ for emerging markets. But many sectors of the U.S. economy remain _______, and some sectors overseas are still _______. The valuation issue continues to be _____, and that means _____ for investors. That has ramifications for corporate profits that will be ______. We think the economy is going to do ______, and you know that means inflation will be _____, which will force interest rates to ______. Under these conditions, the sectors most likely to benefit from this are ______, ______ and ______. The companies best positioned to take advantage of this are ____, ____ and ____. Based on all that, we especially recommend an overweight allocation to ____, ____ and ____. Thus, we believe the Dow will be at ______ next year.”
There is a lot of fascinating ramifications to that answer, discussed in great detail in the column. “Sound Bites” don’t equal sound investment advice.
The best investment strategy for you? It’s the one you’re likely to stick with.
Washington Post, August 16, 2015