The Aspirational Investor

objective-driven investing.

The singular message of this book is that investing is not about the markets. Investing is about you. Your investment strategy can and must be designed to help you make progress toward the things that matter most.

Buffett’s short-term under-performance highlights an important insight about money management and the investment process: when a manager sticks to a disciplined framework, it should be expected that he or she will under-perform the market for periods of time.

“First do no harm” is a principle to invest by.

a group’s estimate trumps individual estimates only when participants make their own decisions (or guesses) and are not influenced by fellow participants—and when individual results are then aggregated and averaged.

A diversified portfolio delivers primarily the market return. Therefore, in any given year, small tactical bets, made by either overweighting or underweighting a particular asset class or allocation to a specific investment manager, will not make much of a difference in your total return.

If your managers do not take big bets, then the alpha generated by your portfolio will be small and the return from market exposure (beta) will dominate. In addition, your portfolio’s monthly performance will be highly correlated to the performance of your benchmark. • If you want alpha, you will need to find a few very good managers and allow them

Cash is, simultaneously, an angel of safety in the short term but a devil that drags down your returns in the long term.

The “market,” as we have seen in the earlier chapters, represents the aggregate wisdom of the crowd as well as the foolishness of the masses.