Investments in the health and education systems, access to services, nutrition, knowledge and skills are all programs under the umbrella of human sustainability. Social sustainability aims to preserve social capital by investing and creating services that constitute the framework of our society. It means to preserve future generations and to acknowledge that what we do can have an impact on others and on the world. Economic sustainability aims to maintain the capital intact.
It refers to the efficient use of assets to maintain company profitability over time. A more recent approach to economics acknowledges the limited incorporation of the ecological and social components in this model. My chances of being the first to find it are not that good. According to Bernstein, there is no evidence or theory that says professional money managers can regularly pick winning stocks as the short-term returns from individual investments seem to be random.
This kind of intensive and thorough research is not everyone's forte. So, he feels that simply investing in index funds without trying to figure out which companies will do well can be a better strategy than picking individual stocks. He suggests investors mix foreign stocks, precious metal stocks and value stocks in their portfolio, because they do well when the broader share market struggles.
Understanding of investing history Bernstein believes investors hardly have any knowledge about financial and investment history and how the previous investment legends dealt with market bubbles, booms and busts. He feels that by looking at years of information about financial markets, investors can learn valuable lessons, which would tell them about the short-term and long-term behaviour of various financial assets.
According to Bernstein, irrational exuberance is a key hurdle that investors face in the market as markets can get irrational and overreact at times. Bernstein feels investors who are unaware of financial history are irretrievably handicapped and, hence, an understanding of financial history provides an additional dimension of expertise to investors. Since risk and return are just different sides of the same coin, it cannot be any other way," he says.
Bernstein says by understanding the history of investing, investors can make more considered, rational choices and this might also prevent or at least mitigate the future market bubbles. Knowing insights of the psychology of investing Bernstein says, herd instinct, overconfidence, recency bias , need for excitement, myopic loss aversion, and other human flaws lead investors to making investing mistakes.
He believes just being aware of the psychological component of investing can help prevent some mistakes that investors make. He feels the state of mind in which investors are in affects their decision making. So, it is important to understand behavioural finance to avoid the most common mistakes and to confront their own defective investment behaviour.
Bernstein believes investors themselves are their own worst enemies. He feels although diversification and indexing are the most reliable methods to obtain long-term investment success, it is not very popular with investors. Many people believe investing should be exciting. Bernstein provides a list of techniques to deal with psychological pitfalls: Recognize that the conventional wisdom is usually wrong. Don't become overconfident.
Don't believe that you're smarter than the market. Ignore the past 10 years. Recent performance has little bearing on the future of a particular stock or mutual fund. You shouldn't invest for entertainment. This isn't gambling.
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Andy Tanner – The 4 Pillars of Investing. Pillar 1: Fundamentals The easy way to understand how to measure the financial strength of anything: governments, companies, even your own Missing: social work. Aug 17, · The 4 Pillars of Investing can be divided into four areas: Fundamentals Analysis. Technical Analysis. Cash Flow. Risk Management. As part of the course, you’ll also learn Missing: social work. Four pillars for successful investing are: Pillar One: Investment Theory – Risk and return are just different sides of the same coin. Pillar Two: Investment History – Of the four key areas of investment knowledge—theory, history, psychology, and investment industry practices— historical knowledge is the most impor See more.