FYI: Successful investing can be complicated. And our natural inclination as human beings is to want to address complicated problems with complicated solutions. But that can be to our detriment at times. Jim O’Shaughnessy wrote an excellent tweetstorm on Twitter this week on the benefits of simplicity and it got me thinking about how difficult the balance between simple and complex can be in investing.
From what I have seen in my career running factor-based models, simple is usually best. Our tendency as human beings to make things more complex than they need to be tends to do more harm than good, and leads us to seek complex solutions when simple ones would do just fine. But investing is a complex game and just using the simplest solution to any problem can also be problematic.
Regards,
Ted
http://blog.validea.com/the-balance-between-simple-and-complex-in-investing/
