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Empowered Investor: A Guide to Building Better
Portfolios by Keith Matthews
Price $15.95>> 
 Investment
Principle #1: Invest in Asset Classes
Asset Class Investing Should Be the Foundation of Your Portfolio
Now that we’ve reviewed the pitfalls that many investors fall
into,
we can turn to some concrete solutions. The chapters in this part
deal with the Three Investment Principles. Informing yourself of
these principles is a crucial first step in ensuring a successful
financial future, and in casting off the fast-food philosophy that
can affect many of our most important investment decisions.
There are three types of investing: market timing, stock picking
and asset class investing. Market timing and stock picking rely
on the belief that someone can either predict the future or gain
by
discovering the errors of others. Wall Street and Bay Street firms
spend billions trying to out-predict the competition, and to convince
you that it is possible.
Stock picking (an attempt to identify winning stocks) presumes
that someone—you, your advisor, or the newest guru—can
consistently find underpriced securities that others have failed
to discover. Market timing (buying and selling based upon the latest
“hot” investment) presumes that someone can consistently
identify when the entire market, or a market sector, is underpriced,
and then predict when it will move up or down. Each of these types
of investing is fuelled by hype, and preys on emotion rather than
reason.
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