There are many who would suggest that, in a digitally-wired world in which information travels at light speed to all corners, the investment playing field has been leveled between individual investors and the institutions. In reality, however, the incessant noise and information overload can do more to fuel the irrational behavior of investors than it can to provide any sort of advantage. Absent a principled investment philosophy that guides their decisions and keeps them focused on their own investment objectives, investors are more likely to succumb to the mentality of the herd which can take them over a cliff.
The same can be said for new, tech-driven investment models which can create an over-reliance on lab-generated portfolios that can lull investors into a blinding complacency. The problem with many investment models that hypothesize future returns is that they tend to be based on risk calculations that imply knowledge of future uncertainties, which is impossible. They also assume that people, as a whole, will act rationally, which has been disproven time after time. Investors, who are grounded by a foundational investment philosophy, don’t have to rely on flawed investment models or the rationality of other investors.