Investors often feel compelled to buy more when stock prices rise and sell when they fall. New investment products can sway their decisions, and shifting market forecasts can prompt changes in strategy. This scenario is familiar to many investors.
The new book Invest Only in Winning Investments starts from this premise. It emphasizes the importance of creating a structure that allows investors to endure market fluctuations rather than trying to predict market movements accurately.
Authors Kim Dae-jung, Executive Director at Forest Partners, and Lee Geun-min, Director at Forest Partners, flip the familiar question of 'How can we beat the market?' on its head. They argue that before pursuing higher returns than the market, investors should first make choices that enhance their chances of success.
Kim has spent 26 years in the securities industry, focusing on financial products and pension services. He studied public administration and policy at university and graduate school, gaining experience in pension planning and retirement asset management. He currently writes columns and books at Forest Partners, with previous works including The Gift of Cat Ray and Entrusted Assets.
The book does not focus on flashy stock selection methods or short-term trading techniques. Instead, it revisits fundamental investment principles such as asset allocation, diversification, cost management, regular investing, rebalancing, and compounding. It compares various investment strategies through data, case studies, and simulations to identify sustainable long-term investment approaches.
One key point emphasized by the authors is 'sustainability.' While high-performing strategies may emerge in the short term, maintaining those results over the long haul is a different challenge.
Investor behavior also plays a significant role. In a bull market, investors may rush in late, while in a bear market, they may want to exit to avoid losses. As new information and forecasts flood in, sticking to established investment principles can become difficult. Frequent decisions and trades can increase costs and shorten the time available for compounding, which is essential for long-term investing.
Thus, the standard for 'winning investments' in this book is not achieving higher returns than others. Instead, it focuses on reducing unnecessary costs and choices while guarding against emotional decision-making, ultimately creating an investment structure that allows participation in long-term market growth.
The book also addresses long-term assets like retirement pensions separately. It advises against constantly changing investment directions based on short-term returns, advocating for managing asset allocation, diversification, and costs to allow long-term investing to take effect.
Ultimately, the book poses a simple question: Among the myriad of products and strategies, what should investors choose?
The authors suggest that investors do not need to seize every investment opportunity. Instead, they should avoid unfavorable games and select investment methods with relatively advantageous conditions, maintaining those choices over time. The focus should be on controllable decisions rather than the desire to outperform the market.
As investment information becomes overwhelming, it is easy to become preoccupied with what more to learn. In contrast, Invest Only in Winning Investments emphasizes what not to do and how to adhere to established principles over the long term.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.