Evolution and Investing

What percentage of the world’s wildlife has gone extinct over time? Which animals have gone extinct, and why? The Giant Tortoise has staved off extinction for millennia, now with the assistance of humans, but does that matter?

The same questions can be posited in the context of investing. What percentage of the companies will survive? Which companies will generate the most significant returns, for the least amount of risk, for the longest time? Will there be future government bailouts? But are these the questions investors should be asking?

Investors, and the financial industry, can give great weight to questions that don’t matter while overlooking the obvious. As a result, investors can shell out for expensive advisory fees and investment product fees, devolving their wealth without answering the question that matters – How can I defensibly get the market return for the lowest cost?

Index Investing.