In physics, people are looking for a unified theory. It’s possible one doesn’t exist.
Ever since Maxwell discovered the way to combine the forces of electricity, magnetism, and light, physicists have sought a unified theory that ties all the forces in the universe together. Einstein worked to describe both electricity and magnetism, but there are other forces in the universe—the forces that hold a stable atomic nucleus together, or tear it apart when it’s radioactive.
Scientists haven’t yet figured out a uniform way to describe these various phenomena. There are competing models with names like String Theory, Brane Theory, or Warped Gravity. They’re all highly complex mathematical approaches to difficult problems. There’s no consensus on a single solution.
In finance as well, people look for singular answers. What’s the best portfolio? What’s the best accounting method? Which stock is hot right now? In finance, as in physics, it depends on your perspective.
The best portfolio is the one that meets your individual needs over time. If you need income, a fast growing private equity portfolio doesn’t work. If you’re a 20-something saving for retirement, a ladder of T-Bills doesn’t fit the bill, either. There’s no single approach that’s ideal for everyone. There are an array of individual requirements and limitations that have to be applied by each investor before anything is ever bought or sold.
Responsible financial professionals understand that life is complex. Anyone who tells you otherwise is probably selling something.
Douglas R. Tengdin, CFA
Chief Investment Officer
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