By Scott Johnson, CFP®, CPFA, AIF®
Senior Vice President
When I was a kid in the 1980s, my dad was a Stock Broker and the “Back to the Future” movie trilogy was huge! In the 1989 sequel, Marty goes into the future and gets a sports almanac with 50 years of sporting outcomes, which would give him the ability to successfully bet on every future sports event. My fantasy was more simple. I just wanted to go one year into the future and get a Wall Street Journal that could tell me the 12-month future stock prices for every stock. I figured I could start with $1000 and turn it into a billion dollars in 12 months with that information.
Unfortunately, time machines don’t exist, and no one has yet to develop an accurate market forecasting method for determining future stock prices - trust me on this!
The equation for successful investing is probably different than many people think. We believe the equation is: (80%) Good Investor Behavior + (20%) Right Mix of Investments = Investment Success!
Putting the right mix of investments together is far less important than avoiding behavioral mistakes along the way. The problem is that all of us, even professional money managers, are wired with behavioral biases that cause us to buy high and sell low.
Dimensional Fund Advisors (DFA), one of the mutual fund families that we use at Arista, produced a short 5-minute video that I would encourage you to take the time to watch. In the video, you will learn some important lessons on avoiding the behavioral mistakes that we are all prone to make when investing. These are the same mistakes that we at Arista Wealth Management work hard to prevent our clients from making.
*Scott Johnson is an Investment Adviser Representative of Arista Wealth Management, LLC, a Registered Investment Adviser