We’ve long been believers that investor education is an essential component of our relationships with our clients, so we’ve continually challenged ourselves to make the tenets of our philosophy as easily understood as they can be. Below you’ll see the most basic 5 points. Master these, and you’re on your way to a high level of financial sophistication.

1: Markets Are Efficient
Public information is of little fundamental value. New information is so quickly incorporated into asset prices that use of this knowledge cannot be expected to consistently yield superior risk-adjusted returns.

2: Risk and Expected Reward Are Related
Investors who expect or need to achieve higher returns must accept the associated risk. Equity-like returns do not come without commensurate risks. There is no promise of high returns without high risk.

3: Diversification Works
Global diversification across a variety of imperfectly correlated asset classes is the most effective way to reduce risk. Diversification is always working, whether we are pleased with the immediate results or not. Diversification should be thought of as the equivalent of buying insurance against having all of your investment eggs in the wrong basket.

4: Markets Are Unpredictable in the Short Run and Even in the Long Run
In the long run, we expect that equity markets will rise more than fall. Individuals who correctly predict short-term market movements should likely attribute their results to luck rather than skill.

5: Discipline Is Key to Successful Investing
For far too many investors, the variable that ultimately determines the results of their portfolio is not investment returns but investor behavior. Emotions can lead investors to make poor decisions at the wrong times. It is easy to remain disciplined during bull markets. However, it is far more important to do so in bear markets and avoid the human propensity to sell at market bottoms.

Summary
No matter where your plan goes, we will continue to place the utmost importance on evaluating risk tolerance, building a globally diversified portfolio, and implementing regular, disciplined rebalancing techniques. Having such knowledge changes the way you approach investing.

We’ve started to use social media platforms here and there, and we want to make sure you catch some of our shorter bits throughout the month. To that end, we’ll do a monthly roundup of posts that you might have missed here in the newsletter. Here’s the sampling from March and April.

With the buzz of the 2014 Major League Baseball Season in the air, this is a great time to revisit one of our favorite books, Moneyball, by Michael Lewis. For the unfamiliar, this book is to baseball as Taking the long view is to investing: a look at how data and evidence will allow you to make smarter decisions in evaluating baseball players—and investment choices.

Our colleague, friend, and director of investment strategy for the BAM ALLIANCE, Jared Kizer, wrote a great blog post where he talks about some of the similar applications in investing that predate Moneyball.

When you use the data and evidence, it allows you to ignore the noise and focus on factors that really matter. That’s how we approach investing for our clients.

If you haven’t read Moneyball or seen the movie, let us know and we would be happy to send you either version of this now classic Michael Lewis story.