Why a Second Opinion?

Why a Second Opinion?

Why a Second Opinion?

A second opinion is a common practice in the healthcare profession, but is seldom practiced in money management.

A second opinion on investments is often clouded in stock analysis, market timing and economic issues rather than an overall portfolio process. Given there are over 60 years of peer reviewed academic research on portfolio theory, the second opinion questions should focus on three things:

  1. What is the academic basis of your portfolio process?
  2. How could your portfolio process be better? and
  3. What institutional plans share the same portfolio process?

In portfolio investing there are the things you know and don’t know. Unfortunately the investment industry some times sells the idea they know something they can’t know



Can’t know but assume they know

  • Diversification across asset classes is essential
  • Capturing the return of each asset class is essential
  • Markets are random
  • Markets work
  • Managing your investment behaviour is essential


  • Which stocks will go up and which will go down?
  • Where is the market headed in the next year?
  • Where interest rates are heading?
  • What will be the next hot investment trend?
  • Where is the price of gold / Oil / tea in China headed?

In my portfolio management process I use what we know to our advantage and control the temptations to act on what we can’t know.

I believe that, over time, a structured investment approach based on financial science and the efficacy of capital markets will add value with a higher reliability and confidence level than one based on instinct and prophecy.

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