Market Timing and Selection

To generate real-life returns, one must focus on:

1.Process and Planning

2.Asset Allocation

3.Diversification

4.Selection

5.Managing Your Behavior

The portfolio composition can control only 10% of long-term real-life returns.

90% includes:

1.Your personal value-based plan

2.Percentage of equities (ownership of great companies)

3.Disciplined diversification within the equity asset class

4.Capturing the full ride of equities with full volatility

Over the investing lifetime of a family, it doesn’t matter whether you selected an equity portfolio based on past performance, fund manager, economy, market trends, growth or value, small-cap, large-cap, sector, thematic, emerging market, or global market — all of these factors together matter only 10%.

95% of your conversation with your advisor should be about your values, life plans, fears, and insecurities, while only 5% of the discussion should be about the portfolio.