Are you spending too much time and energy trying to time the market?

In our latest video, financial advisor James Pommert shares how just like taking detours to avoid traffic doesn’t always pay off, spending extra time and effort on portfolio management isn’t always the best strategy for long-term growth when it comes to investing for physicians. 

Here’s one scenario you can probably relate to: While commuting home from the hospital one afternoon, James thought he was getting ahead of traffic by taking an alternate route. Unfortunately, his extra effort only cost him, and he ended up no further along than the car he was originally behind. 

James’ effort to bypass traffic is a lot like the flashy and time-consuming strategies some investors pursue – often after seeing “Finfluencers” promoting them online. But those private jets you see influencers traveling in probably weren’t bought through day trading – in fact, modern portfolio theory is usually a more effective long-term approach than trying to beat the market.

To illustrate this point, James references Warren Buffet’s famous bet against hedge funds and the S&P 500’s consistent performance as an excellent example of this key principle of modern portfolio theory.

While it’s great for young physicians to take an interest in investing as part of their financial journey, knowing the main pitfalls is essential before getting started. There’s a reason Warren Buffett made his bet (and won)!

Related: 8 Common Money Mistakes Young Physicians Make (And How to Avoid Them)

Looking to connect with a financial advisor to learn more about investing strategies for physicians? 

Click here to schedule a complimentary, no-pressure consultation or explore our library of other resources for early career physicians.

Chapters

• 00:01:03 - James relates being stuck in traffic to your investing journey.
• 00:02:17 - Why modern portfolio theory requires less effort than “trendy” investment strategies.
• 00:02:38 - Hear an example of how Warren Buffett bet against hedge funds (and won).
• 00:03:52 - James explains how market data over longer periods of time support that modern portfolio theory is often more beneficial than trying to time the market.

3 Key Takeaways

1. Just like trying to outsmart traffic by taking detours, many investors try to outperform the market through excessive trading or picking individual stocks. However, the data shows that active investing is difficult to sustain over time compared to a more passive approach like modern portfolio theory.
2. The example of Warren Buffett's bet against hedge funds highlights how – despite the resources and efforts put into active management by hedge funds – the S&P 500 often outperforms in the long-term.
3. While some may argue that certain time periods can be cherry-picked to support active investing, data shows that a more passive approach tends to yield better results over time.

Find Your Route Forward with Equitta

Curious to learn more about investment strategies for early-career physicians? Click here to schedule a meeting with a member of the Equitta team. 

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