Over the course of my career at Parametric, I’ve had the pleasure of discussing the finer points of investment strategy with a wide range of clients, consultants, financial advisors, and colleagues.
Most have asked great questions, challenged my own thinking on certain matters, and made me better at my job. For that, as I prepare to leave the firm after more than nine years, I’m thankful.
But what’s stuck with me just as much over the years are the investing misconceptions I’ve encountered—and continue to encounter. Those who know me best also know that disproving those investment myths is what really gets me out of bed in the morning. And so, in my final blog post, I’ll try to address what I believe are the top four misconceptions about investing that, if I could, I’d erase from investors’ brains. Here they are, in ascending order of annoyance.
This concept may have arisen from the fact that for most active investors at the dawn of the investment management industry, taxes really didn’t matter, since pension plans, endowments, and foundations enjoy tax-free status. As such, most investment processes were fine-tuned to produce pretax alpha, with little regard for the tax impact of rapidly turning over a stock portfolio.