The Dangers of Trying to Outsmart the Market

Excess Returns

All of us can fall into the trap of thinking that a certain outcome in investing is obvious. Whether it be the future direction of the market, which asset classes will perform best going forward, or the types of stocks that will lead the way, it is easy to think that certain outcomes are a virtual certainty. This can be particularly true during a period like the one we are in where opinions are polarized. But it is important to understand that the market's collective wisdom is usually smarter than all of us and what we think is obvious often is not.

In this episode, we discuss some of the things that may seem obvious in the current market, and why they might be wrong.

We discuss:

- The challenges of deviating from the market consensus

- The impact of the Coronavirus on the market

- Why bonds may still belong in investor portfolios despite their low yields

- the importance of avoiding binary decisions

ABOUT THE PODCAST

Excess Returns is an investing podcast hosted by Jack Forehand (@practicalquant) and Justin Carbonneau (@jjcarbonneau), partners at Validea. Justin and Jack discuss a wide range of investing topics including factor investing, value investing, momentum investing, multi-factor investing, trend following, market valuation and more with the goal of helping those who watch and listen become better long term investors.

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