Your Next Step

We have now arrived at the conclusion of our 12-Step Journey. Along our path, we have brought to light the detrimental impact our own emotions and behaviors can wreak on our investments. 

We have taken a brief walk through the milestones of financial science and been enlightened by a group of academic legends who paved the way by contributing research that facilitates our ability to better understand risk, return, and the collective wisdom of people and markets. 

We have crossed the path of some fallen stars who provide a cautionary lesson on why we should primarily respect the market’s uncanny ability to spontaneously price all known information and to willingly accept that the current price is the best estimate of a fair price. 

We have been challenged to understand the futility of blindly chasing after winning fund managers, knowing their recent hot performance is a function of luck, not repeatable skill. 

We have learned the deleterious results that come from attempting to predict the future performance of markets, sectors, or styles and the erosive costs associated with this speculation. 

We have explored the probability of outcomes and have been guided to an understanding of how and why risk and return walk hand-in-hand. 

We have traveled backward in time to learn that the travails of today are not so dissimilar from those of history and that the precise risk experienced in the past will never be the same, but the ability of a free market to price those risks will be the same. Global capitalism has continued its onward march, allowing its shareholders to participate in the prosperity of a diversified portfolio of companies.

We have evaluated how much risk we can stomach and have been encouraged to be willing participants in market volatility at risk-appropriate levels. 

We have been shown a rainbow of potential investment portfolios that cuts across a wide spectrum of risk and return. 

And finally, we have learned the value of walking with a trusted passive advisor who will guide us through the peaks and valleys of the market, away from the temptations of speculation and toward a more rewarding and tranquil way of investing. 

Each step of this book has been opened with a stanza from “The Speculation Blues,” a song I wrote that summarizes the many emotions and struggles of active investors — the lyrics of which can be found on the following pages. This song details how those who go it alone, speculating instead of investing, unnecessarily struggle on their investment journey.

I wrote this book to lead investors to a more peaceful and profitable investment experience. I sincerely hope this journey has brought you to a deeper understanding of investing and strengthened your ability to achieve a brighter financial future. 

See Appendix A (

Step 12EmotionBehaviorInvestmentsLuckSkillRiskReturnCapitalizmMarkey VolatilityPassive Advisor