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Debunking Modern Finance Theory in Red Bank, New Jersey

Know any college kids majoring in finance?

I can probably save them the trouble of attending their stock investing class. Because I’m 99% sure I already know what they’re being taught.

And it’s not accurate. Not even close.

As Lawrence A. Cunningham points out in his article “Warren Buffet v. Modern Finance Theory”, colleges and universities are still teaching modern finance theory. At about fifty years old, it’s nearing retirement age itself. Yet it continues to take root between the ears of impressionable college kids who will likely become the next generation’s wolves of Wall Street.

What is Modern Finance Theory, and Why Should You Care?

Modern finance theory promotes the philosophy that accurate stock market analysis is nearly impossible. There are too many fluctuating factors, and the process is too overwhelming to be truly reliable. According to adherents, you need a crystal ball to have any hope of predicting where stocks will move – and that’s why many stock analysts tell you to diversify the heck out of your investments to prevent major losses.

If only they know how inaccurate that is. The point is not in predicting where stocks will go – it’s in choosing good stocks to begin with and weathering the storm despite any market volatility.  

What Does Your Financial Advisor Say?

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Any Monmouth County stock analyst who says he can guarantee you a return on any mutual fund or individual stock is doing more than pulling your leg. Then again, you don’t want your stock analyst to be too cautious. Diversifying too much could leave you vulnerable to losses in addition to mountains of fees for every transaction.

How do you know who to trust?

Facts Don’t Lie

With modern society so keen on facts of every kind, it’s very interesting that college finance departments haven’t picked up on the amazing data showing what Warren Buffet has managed to achieve over the years.

Having achieved annual returns of 20%, he’s doubled the market average. And not just for a year or two. For a solid forty years.

What Really Matters in Stock Investing

Where are your stock investments putting you? Are you on track to retire comfortably?

Do you even know how much you are being charged in unfair fees?

Check out the ValueAligned® approach to stock investing, and then schedule a no-cost, 15-minute financial check-up with me. For even more financial news, sign up for my email list.