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During college football season, people always ask me, "Phillip, why do you like Alabama Football? You didn't even go there and you're from Texas."
Well the truth is, I don't really like Alabama football. I like Nick Saban. He is a process guy like me. The success of his team has less to do with his superior player selection. His success comes from his process.
He has designed a simple, consistent process that allows his teams to be a championship contender year in and year out. He did the same when he was at LSU.
You see the same thing in investing. The best investors are not great stock pickers.
They are the best at sticking to their well thought out and evidence based process.
Principle 1) Asset allocation is the major driver of returns
Principle 2) The economic environment is the major driver of which assets out-perform and under-perform
Principle 3) Lower cost funds tend to outperform higher cost funds over time
Principle 4) Low tracking error is important when selecting funds that track an index
Principle 5) A culture of stewardship is more important that rules and regulations
Principle 6) There is no such thing as a “safe” investment therefore, diversification is one of the best risk management strategies to implement when looking to grow and protect your wealth.
Principle 7) Patience is a required character trait of successful investors
How do I use these principles to create portfolios?
Here are the steps I use:
There are a lot of systems and moving parts behind the scenes that go into building and managing this process, but it’s as simple (not easy) as it sounds.
Phillip Washington, Jr. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
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