Our Investment Philosophy
Investing may seem simple, but history proves otherwise. Many chase trends, only to lose when markets shift. At NewLeaf, we focus on steady, measurable progress toward your goals, prioritizing long-term success over short-term fads.
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 fund managers who try to outperform through stock picking or market timing. As evidence, only 18% of US-domiciled equity funds and 15% of fixed income funds have survived and outperformed their benchmarks over the past 20 years.
Resist Chasing Past Performance
Some investors select 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 of previous five-year returns did not maintain a top-quartile ranking in the following five years.
Let Markets Work for You
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 over the long term.
Consider the Drivers of Returns
There is a wealth of academic research into what drives returns. Expected returns depend on current market prices and expected future cash flows. Investors can use this information to pursue higher expected returns in their portfolios.
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..
Citations
Dimensional. (2024). Pursuing A Better Investment Experience.
Aspects of our investment philosophy reflect the opinions of NewLeaf Financial Guidance. There is no guarantee that any statements or opinions provided herein will prove to be correct.
Historical performance of markets and investment types may not be indicative of future results. Securities investing involves risk, including the potential for loss of principal. There is no assurance that diversification, strategies based on Nobel prize-winning research, or any investment plan or strategy will be successful.