As a Certified Financial Planner(tm) professional for the past few years, but now working exclusively with online marketing and my MLM, I’d like to share one investing concept with you. If you are someone who has a grasp on your own investment philosophy, then this information may not be for you. I understand that folks have different approaches to investing, and my purpose is not to convince you to see things my way.
On the other hand, if you have been wandering aimlessly and don’t know where to turn, I’d like to help direct you. Now, I’m not going to give you specific investment ideas. Instead, I’m going to discuss a principle found in academic research from the past fifty years. The two academics responsible for this concept are Eugene Fama (University of Chicago School of Business) and Kenneth French (Dartmouth College), and it’s called the Three-Factor Model. You can google these two chaps or the concept and read more for yourself.
Here’s a synopsis of the three factors (based on historical stock prices from 1926 – present):
- Stocks outperform bonds over the long-term.
- Value stocks outperform growth stocks over the long-term.
- Small stocks outperform large stock over the long-term.
Watch the video for further explanation, and by all means, post a comment or question for me if you’d like.