Matt Hall - Odds On: The Making of an Evidence-Based Investor

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Published by Greenleaf Book Group Press

Austin, Texas

www.gbgpress.com

Copyright 2016 Matt Hall

All rights reserved.

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Cataloging-in-Publication data is available.

Print ISBN: 978-1-62634-256-9

eBook ISBN: 978-1-62634-257-6

Part of the Tree Neutral program, which offsets the number of trees consumed in the production and printing of this book by taking proactive steps, such as planting trees in direct proportion to the number of trees used: www.treeneutral.com

Printed in the United States of America on acid-free paper

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First Edition

For Mom, Lisa, and Harper.

Thanks for investing in the story of my life.

I am grateful every day.

Thanks to my wife Lisa for setting up the lunch that allowed everything else to happen. Your and Harpers love, support, and encouragement is the fuel I need to keep creating a truly exceptional life.

Thanks to Rick Hill for being an incredible friend and business partner. Knowing you has made me better. I hope our partnership never ends.

To Buddy, Jeff, John, Henry, and Katie, thanks for tolerating my incessant talk of the book and for your valuable feedback throughout this journey. Your patience and applause helped me throughout the process.

Thanks to Clint Willis and Sean Donahue. Working with the two of you on this project has been one of the highlights of my career. You do what I think great editors do take good content and allow it to be great.

To my mom, dad, Sam, and Annie, I dont know how people do things without unconditional love and support from their family and I hope I never find out.

To Dr. Tomasson and Dr. Yang, I want you to know that I aspire to have clients feel the way you made me feelwell held. I am healthy and forever grateful.

Thanks to Adam Birenbaum for the push to make the book happen.

To Ed Goldberg, Mont Levy, Stuart Zimmerman, and Larry Swedroe, I will always be thankful to you for letting me in.

Thanks to my friend Carl Richards for inspiration and encouragement along the way. If I end up on the other side of complexity it has a lot to do with you.

To my college English professor, Dr. Bernard-Donals, who thought my micro-theme was so good that it couldnt have been done by me. I love thinking about that backward compliment.

To my Entrepreneurs Organization forum mates, I thank you for making me unafraid to chase things beyond my old boundaries.

I am indebted to the great and powerful Marilyn Wechter. You have made a huge impact on me, the team, and how we serve our clients.

To the team at Greenleaf Book Group, who took me on and nurtured the book to the highest level. Thank you for believing in my story and the impact it will have on readers.

To my late grandfather, Herman Hall, I know you knew I could do it. You always seemed to know I could before I did.

I want this book to change your life.

Thats an ambitious goal for any book, let alone one about investing, but I know that books have the power to change lives. It happened to me in 1999.

At the time, I had just walked away from a potential career with a Wall Street brokerage firm because I was disgusted by what Id experienced: a broken system designed to make as much money as possible for the firm at the expense of the clients it was supposed to serve. I feared I might never achieve my dream of finding a way to help people while working in the financial world.

Then a chance encounter in the epicenter of odds-makingLas Vegasput a new, relatively obscure book in my hands. This book showed me that there was a smarter way to investone that not only delivered better returns but also actually put the investors interests first. I was so inspired by what I read that I became part of a movement to change the investing world. Ive spent the past sixteen years helping clients adopt this better investment approach. And Ive put everything Ive learned about investing into this book, so I can reach even more people.

Some investment books provide so much technical information that they leave readers feeling overwhelmed and powerless. Thats the last thing I want to do, which is why I decided not to write a typical investment book. Im not going to tell you how to pick stocks or spot the best mutual fund managers. And Im not going to provide a formula for outsmarting the financial markets. Instead, Im going to tell you a storymy story. I hope that the lessons that have shaped my life and investment approach can help reshape yours.

Youll learn, as I did, why the conventional Wall Street investment approach is so ineffective: Its really just another form of gambling. Most investors try to pick the right investments and time the markets moves, but their chances of winning are as slim as their chance of beating the house when they walk into a casino. The deck is stacked against them.

Youll also learn, as I did, about a better investment approach that puts the long-term investment odds back in your favor. My colleagues and I call it evidence-based investing. Evidence-based investing starts by examining decades of data about how the financial markets really work in order to make investment decisions. Based on this scientific evidence, we choose to invest in broad swaths of the global economy that tend to generate higher expected returns over the long term.

If you know what an index fund is, then you already know something about how this approach works. Index funds capture the returns of a group of stocks that share characteristics, such as the size of the companies. These funds dont try to pick which companies within that group will do better than others, yet they still tend to outperform funds that have managers and analysts cobbling together customized stock portfolios over longer periods of time. Building on this foundation, the evidence-based movement has been studying market data and academic research to identify the groups of stocks and other investments that provide better odds of long-term success. If you come to believe what I believe, youre unlikely to gamble with your life savings again.

The science behind evidence-based investing is only part of the Odds On story. When I was thirty-three and in the midst of developing my skills as an evidence-based investor, I was diagnosed with a potentially fatal illness. I thought I might die without achieving many of my lifes most important goals. But the doctors who took care of me taught me an important lesson about how to truly help people facing intense anxiety and uncertainty. That experience helped me combine an evidence-based strategy with an approach to client care and guidance that helps people stick with their investment plan and let the odds work in their favor.