Most investors want to know how they can increase the chances that they will meet their long-term investment objectives. And whether you’re just getting started or you’ve been investing for years, there are some questions you’ll want to consider together with your investment advisor. When you know what questions to ask, the answers can help shed some light on key principles that could boost your odds of success over the long run.
One question you might ask concerns competition. Every day, millions of market participants buy and sell securities, and the market processes this information to help set prices. What this means is that competition is fierce, and trying to estimate market prices is a tough job for anyone, even professional investment managers. Instead of trying to find securities that are priced “incorrectly,” you can learn how to help use market information in building your portfolio.
You should also think about the odds of any investment outperforming. The market’s pricing power works against anyone trying to outperform through stock picking or market timing. What does this mean to your strategy? Take a look at Dimensional’s research to see how this affects you.