Evidence-based approach can take the guesswork out of investing
Many would argue all investment decisions are based on certain bodies of evidence, but we should focus on those that are peer-reviewed, time-tested and academic in nature
A few days ago I visited my physio with a middle-age sports injury. We started discussing the pros and cons of ultrasound. The physio, a consummate professional, immediately began to cite the publications and evidence for or against its use. It reminded me of where the medical profession stands relative to my own in investment management.
Mark Ebell, a professor at the University of Georgia, defines evidence-based medicine (EBM) as the “conscientious, explicit, and judicious use of current best evidence in making decisions about the care of individual patients”. I’d go along with this approach. You? I guess the alternative is a sort of “learned guess” or trial-and-error approach, which may yield results but may also go horribly wrong. Or perhaps in the SA context a visit to your local sangoma (but now I’m treading on dangerous ground).