One of the major challenges for all of us has been trying to make sense of the Covid data and information that has been thrown at us.
Arguably, this can be compared to the process and understanding required when considering your investment selection and choices.
Specifically, it can be very easy to look at historical investment returns and conclude there are patterns or explanations, when in fact, that is not the case and supposedly “brilliant investments” have occurred more by chance or luck.
Crucially, you should not be misled by this data because it is giving you no insight into what future investment returns or the success of that investment.
In this guest article, Professor Kenneth French, Director and Consultant at Dimensional Fund Advisors, who is one of the foremost and respected global financial academics, contrasts his personal experience of Covid, and the problem with false negatives and false positives, with the challenges you face as an investor.
Spoiler alert! This is a relatively technical read, but with some key pointers for you when choosing your investments (strong statistical evidence, patterns that lack foundation etc.)
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