About The Skilled Investor

Why is this site named "The Skilled Investor"

The name of The Skilled Investor website implies that skill rather than luck should be the key element of anyone's financial planning and investment portfolio management strategy. The Skilled Investor provides scientifically based educational information to help individuals to increase their financial and investor skills. Our central goal is to help you to become more skilled at your lifecycle financial planning and investing.

For example, many people believe that investment success has something to do with being smarter than the other person and selecting supposedly 'under-priced' securities. Unfortunately, the other people looking at the same securities and prices usually are pretty bright, too. This competition among investors in global securities markets largely ensures that any truly consistent "beat the market" skill among investors will be very rare. Uniformly, scientific studies have shown that investors who appear to be very skillful in the short-term tend to be just average over longer periods. Superior "stock picking" would require better prediction of future events, yet no one has a reliable crystal ball or predictive calculator. Current securities market prices can only reflect the current risk-adjusted consensus about possible future outcomes. No one is right or wrong, until the future is revealed through the passage of time.

In such an environment, there inevitably will be a very large element of random chance. What is just short-term luck distributed across the population of investors will be mistaken for skill by many, and these naive investors will chase after this lucky past performance with their money. The scientific investment returns literature indicates that such strategies lead to inferior returns and should not be the basis of anyone's lifelong financial planning and investment strategy. Attempts to beat the market are flawed, because they involve unknowable outcomes, higher costs, higher risks, increased federal, state, and local taxes, and a greater time commitment.

Instead, a truly 'skilled' investor will seek out and use only scientific personal finance and investment strategies that have been proven through valid research. He will rely about proven methods to achieve financial success. Therefore, it is the objective of The Skilled Investor website to help investors understand scientific financial planning and investment methods that are based upon skill and not random luck, hype, and self-interested promotion.

The author and editor of The Skilled Investor is an experienced executive with expertise in business management, investments, economics, statistics, and accounting. He holds a BS from MIT, an MA from Brandeis University, and an MBA from Stanford University.

What is the author's motivation?

In 2001, I established Lawrence Russell and Company and began an in-depth and systematic reading of the scientific finance literature. I wanted to find out what was true, false, and ambiguous about personal financial planning and investing. These activities lead to the development of The Skilled Investor and of VeriPlan, which enables individuals to do their own financial lifecycle planning.

In 2003, I began to develop a highly customizable lifecycle planning model. This financial planning software tool, which became VeriPlan, was designed initially to serve as a decision support tool for my advisory clients who wanted to develop coherent and personalized lifetime plans based upon scientific investing. I also began to give educational presentations on investing to local organizations, including Rotary Clubs, CPA groups, financial planning groups, etc.

As I spoke with individuals and groups about their needs, it became clear that everyone had similar, yet distinct, financial planning needs regarding their families' financial futures. While more wealthy people (think millions of dollars) had somewhat greater complexity to their financial affairs, caused largely by our incredibly convoluted U.S. personal tax codes, everyone needed sophisticated financial lifecycle planning. Whether wealthy or not yet wealthy, everyone needs a personalized way to understand how their current financial behaviors could affect their families in the future. However, few people already owned enough assets to justify the high cost of a competent and objective advisor. Only those who are wealthy enough now have a reasonable opportunity to afford professional financial planning assistance.

This lead me to focus significant resources on the further development of VeriPlan as a standalone financial lifetime planning software product with comprehensive and fully integrated financial calculators, investment calculators, loan calculators, retirement calculators, and other personal finance software. Clearly, the mass of Americans would never have access to a personalized lifecycle planning application, unless an inexpensive software product was developed. Since I already had developed earlier versions of VeriPlan for use with clients, I decided to develop a standalone configuration that individuals could operate themselves. Furthermore, I decided that it must be priced low so that almost everyone could afford it. These are the reasons why I have dedicated significant time and effort to provide both The Skilled Investor and VeriPlan to those who want to improve their ability to manage their own financial planning and investing affairs. Larry Russell, Author and Editor of The Skilled Investor.

Does The Skilled Investor have a blog?

Yes, we have two Wordpress blog sites in the sub directories /wp/ and /VeriPlan/. The /wp/ directory has a wide variety of personal finance articles and the /VeriPlan/ directory has articles that are more focused on do-it-yourself financial planning and the VeriPlan DIY personal financial planning spreadsheet software based on the Microsoft Excel workbook application.

You can find these two sub-directory sites here:

DIY Personal & Retirement Financial Planning

VeriPlan Personal Financial Planning Software