To provide one example related to overconfidence, the consulting firm FutureMetrics studies the performance of major U.S. corporate pension plans; their most recent analysis included 192 firms during the period 1988-2005. Out of the 192 pension plans attempting to outperform the benchmark,  29 percent (55 plans) succeeded. Seventy-one percent (137 plans) failed to outperform the simple benchmark. It would be logical to assume that individual investors, with far fewer resources available to them, would likely fare even worse.

Our Conclusion

By accepting the Efficient Markets Hypothesis as fundamental to your portfolio management strategy (whether "you" are an individual, family or retirement plan), you don't have to spend time chasing the very few mispriced securities that might occur.

Instead, you can focus your efforts on:

• Defining and incorporating an appropriate amount of risk within your portfolio
• Capturing as much of the market returns as possible given your risk tolerance
• Minimizing costs that might otherwise detract from your returns
• Periodically rebalancing your portfolio according to these guidelines
• Spending your leisure time pursuing your life's interests, rather than trying to predict

  or react to every market fluctuation

To achieve these goals, your BAM Advisor will:

1. Implement and maintain a disciplined investment strategy using investment vehicles specifically

   designed for this purpose.

2. Recognize and successfully avoid behavioral traits that can weaken your resolve to stay

   the course in a continuously volatile market.

3. Provide a comprehensive portfolio analysis so you can see exactly what you own,

   how your portfolio is invested, and how much it costs as well as hidden costs you might not have

   known about before.

If you would like to talk to a BAM Network Advisor about customized wealth management strategies that can help you reach your financial goals, please call us at (866) 417-2211 or submit our inquiry form by clicking here: Find a BAM Advisor.