A Note from the Author
(Click here to jump to the Table of Contents)
In 2006, I published Least Risk Investing – Avoiding Investing’s Most Common Pitfalls. While it never made the New York Time’s best-seller list, it did receive acclaim from one of my industry heroes and, perhaps most importantly, it served as a launching pad for my investment management firm (which, at the time, was called “Intellivest”).
In 2012, I published the 2nd edition of Least Risk Investing (LRI) and, in reviewing the original publication for updates, I was pleased to reaffirm that the core principles of LRI were as valid as ever.
Fast-forward to 2018, 12 years after the original publication, and its time for another update. This time, however, I’ve decided to re-publish the book on-line. As I review the original publication, I’m tickled, once again, to re-verify that the core principles of LRI are still alive and well.
So what, exactly, are the core principles of LRI? Fundamentally, LRI is about:
- Avoiding the (many) investment-related risks that have negative expected payoffs (like active management), and
- Exposing yourself only to those risks that have positive expected payoffs, but only to the extent that taking those risks buys you something of value (like achieving your most important financial goals).
Twelve years ago, these were reasonably revolutionary ideas. Only a relative handful of firms were promoting passive portfolios (which are now referred to as “evidence-based” portfolios), and the industry was just beginning to wrap its arms around goals-based investment management. In addition, while the idea of passive, goals-based investing has snowballed during the past decade, the industry has yet to fully embrace the idea of “least risk” investing: attaining your goals with as little risk as possible and then, once you’ve arrived at your financial destination, decreasing your risk even further, if possible, to protect what you have. This is an especially important concept for affluent investors.
During the next several weeks, I’ll be reviewing, re-writing and updating LRI. As I complete each chapter, I’ll post it below. If your current portfolio isn’t “least risk,” and/or if it doesn’t employ “evidence-based” concepts like tilting your portfolio toward value and small-cap stocks, I urge you to read a chapter or two.
Table of Contents
1. Tea Leaves, Ouija Boards & Tarot Cards
2. So You Think You Can Dance?
4. So What?
5. Bits & Pieces
6. Finding a Needle in a Haystack
7. Worst Best Practices
8. The Right Answer