Pursuing a Better Investment Experience – Decision 1: Embrace Market Pricing

The ups and downs of the market can make for a stressful investing experience.  Selecting the “winning” stocks and timing the market so you buy and sell at just the right time is a challenging feat, and placing the right bet consistently overtime is nearly impossible – even for professionals.  In 2015, for example, when the Standard & Poor’s 500-stock index posted a meager total return of 1.4% with dividends included, two out of three “actively managed” large-company stock funds posted even smaller returns than the index.1

At MPM Wealth Advisors, we think there’s a better way to invest. Over the next couple of weeks we will be sharing 10 decisions that may help investors target long-term wealth in the capital markets.

Decision 1: Embrace Market Pricing

UntitledThe market is an effective, information-processing machine.  Millions of participants buy and sell securities in the world markets every day, and the real-time information they bring helps set prices.

This doesn’t mean that a price is always right—there’s no way to prove that. But investors can accept the market price as the best estimate of actual value.

If you don’t believe that market prices are good estimates—if you believe that the market has it wrong—you are pitting your knowledge and hunches against the combined knowledge of thousands or
millions of other market participants.


1. SPIVA U.S. Scorecard released  by S&P Dow Jones Indices 3/11/2016.