Sharpe Investing

William Sharpe offers tips for savvy investing, adapted from his 2007 book “Investors and Markets” and informed by his seminal work at Foster in the 1960s leading to the 1990 Nobel Prize in Economics.

DiversifyReally diversify. Buy a percentage of everything that’s out there, stocks and bonds as a start.

Economize – Keep costs down. Investing in low-cost index funds delivers 20 percent more income than actively managed funds over your entire retirement.

Personalize – Every investor is different, with different preferences, different levels of risk tolerance, facing different situations and different stages of life. Invest in the way that suits you, not the herd.

Contextualize – Remember that a share price is the result of many smart investors trying to figure out what it’s worth. Don’t expect to get something for nothing by following some hair-brained scheme that somebody is pushing on you.

As for Sharpe’s personal strategy? “I don’t tell people how I invest,” he says. “But let’s just say I have really good friends at Vanguard.”

Read about Sharpe’s work at Foster.

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