What do you get when you combine an evidence-based process with visionary team spirit and brilliant leadership? A World Series Commissioner’s Trophy, for starters. The “rags to riches” tale of the Houston Astros 2017 World Series victory is now available for your reading pleasure, thanks to Sports Illustrated senior writer Ben Reiter.

We love the recent approach to managing the Astros because it mirrors our approach to investing in two major ways:

• First, it is backed by data. The Astros management seeks to fully understand the factors that drive wins, quantify them, and weight heavily toward them.
• Second, like with investing, achieving your long-term goals may sometimes require short-term sacrifices. If you have the right philosophy and the right process, you can trust that the odds will work in your favor long-term.

Something of a visionary himself, Reiter actually predicted the team’s 2017 victory on the cover of the magazine’s June 30, 2014 edition. Was that luck or forecasting talent? You be the judge, when you read Reiter’s entertaining account in “Astroball: The New Way to Win It All.”

Reminiscent of Michael Lewis’ Moneyball tale of the Oakland A’s, the Astros applied similar evidence-based strategies to improve their game. They leveraged what the Oakland A’s Billy Beane began and took it a step further, incorporating (with help from the “Nerd Cave”) scores for more unconventional qualities, such as personality and grit. These elements and more are touched on in this review: “[R]oster-creation, all by itself, did not bring home the championship. Building an exceptional team is one thing, but making it work as a team is another.”

We’ve said it before; we’ll say it again: We couldn’t be prouder of our exceptional home-town team. Go Astros!

Bonus read: For more of baseball’s rich historical lore, I also enjoyed this recent PBS documentary on legendary hitter Ted Williams, in all his quirky glory (narrated by St. Louis’s own Jon Hamm). This related New York Times piece tells the backstory of how some of the film’s best footage was almost lost for good.

As we described in this related article, we’re fans of taking a rules-based approach to investing instead of trying to actively forecast a market’s next move or a stock price’s next swing. Attempts to outsmart the market are more likely to waste your energy than deliver higher long-term returns.

So, this begs the question: Why don’t we recommend index funds exclusively for our clients?

We really like aspects of the indexing philosophy. Passively managed index funds typically employ a rules-based strategy to capture returns by tracking a popular index at a low cost. So far, so good. But, as we focus in, like we did in this piece, we start to find some inefficiencies that point to why index funds may not be the optimal vehicle for clients looking to maximize market returns. Curious to learn more? Give us a call.

“Recency” is one of the most insidious behavioral biases that can impact an investor’s ability to Take the Long View® with their investments. The name alone suggests it’s the opposite of what we’re about here at Hill Investment Group.

Those ruled by recency will disregard decades of data, and instead allow only the latest, relatively random data points to skew their view. A prime example occurs whenever purveyors of traditional active investing revisit a perennially misleading script that goes something like this: “If too many investors invest in index funds (i.e., if the market is left to run on auto-pilot), there will be nobody left to set proper pricing. Investors should revert to an active investment strategy, before it’s too late.”

Again, the argument is nothing new; if index funds were the only investment available, markets would indeed stop functioning. But with every new season, the traditional active camp seems to come up with a fresh batch of stats that supposedly signal that the end of index investing is nigh.

Recently, the focus has been on index investing inflows – or, more accurately, their reduced volume. So far this year, the deluge of dollars mostly heading out of active investing and into index/passive funds has decreased to a more orderly flow compared to 2017.

Is index investing on the wane? In this related piece, we share a quibble we do have with index investing, and why we typically favor a similar, but more direct approach for capturing scientific sources of expected return. But before anyone concludes it’s time to get more active at timing and selecting specific stock picks, here are three, recency-dispelling reads we suggest:

“Index Funds Are Going to Be Just Fine,” Barry Ritholtz, ThinkAdvisor

Our favorite excerpt: “Why must we complicate what is otherwise a simple explanation? Investors have become a little more financially literate; indexing is maturing as an investment style. Those who are hoping for a major reversal of a trend that has been 40 years in the making are very likely to be disappointed.”

“Indexing Fuss Unwarranted,” Larry Swedroe, ETF.com

Our favorite excerpt: “While it’s certainly possible that, at some point, passive investing could reach such a dominant share that price discovery would be limited, clearly, we are nowhere near that level, and almost certainly won’t be there for a very long time.”

“The growth of index investing has not made the markets less efficient,” The Economist

Our favorite excerpt: “Perhaps the growth of indexing has robbed the world of outstanding stockpickers. But it seems more likely that it has put a lot of bad managers out of business … And it is not as if the buying and selling of stocks by informed investors with opinions has ceased. The turnover of stocks has actually increased over time. Active investors are more active than ever.”