Past investment strategies may not hold

Given what has happened to the markets in the past three years, especially events like the
"flash crash," it's clear that the Efficient Market Hypothesis, which believes that markets trade efficiently and asset prices reflect all available information in the marketplace, does not hold true. Just as problematic is the Modern Portfolio Theory to create asset allocation models as reality did not match results illustrated by computer-generated models. "Be wary of mixing and matching fund investments based on programs that use prior history to develop investment models," adds Shaffer. "Consult a professional that can actively manage a portfolio verses buy and hold strategies. With markets moving so rapidly from day to day, buy and hold may not produce expected results."

1 comment:

  1. Consulting a professional is a great thing because these are your investment you are talking about. But, you should do something yourself as well. Read about the market trend as much as you can and monitor your investments. See, it's not buy and forget; it should be buy, monitor, analyze, hold, and eventually sell. There's no sure investment but doing so will increase your chances of profiting.

    Martha Moore
    Visit our website for more information on real estate and investing.