Do you want to maximize your investment returns? Of course you do.
Who doesn't? You read, research, discuss and do your level best to discern which of the myriad of choices available to you will maximize your personal wealth.
If you are like most investors, you focus all your efforts on picking the "best" stocks or "four-star" funds that are hot and hopefully will stay hot until you decide to sell them in favor of the next "hot" opportunity you uncover.
Would it surprise you to learn your behavior is sabotaging your returns? "No way", you say.
"I trust the experts and my own insight.
I read Investor's Business Daily each morning.
I subscribe to two stock newsletters.
I pay attention to the news of the day.
I hold every 'expert' accountable and if they underperform my expectations I fire them.
How dare you imply my strategy is wrong.
" Believe me, I understand you.
Successful investing should follow the same rules we apply in other areas of our life.
You know that diligent practice on the tennis court or driving range will improve your game.
You know your daughter's SAT score will improve if she would only study for the test.
Investing should follow the same rules.
We should be rewarded when we work hard and hone our investment skills.
We should, but we are not.
Jason Zweig nails this issue in his book "Your Money and Your Brain" as he describes the "three main reasons why investors who do the most homework do not necessarily earn the highest grades.
"

1. The market is usually right.
   Millions of investors compete with one another to set the price of everything in the market.
   Their collective wisdom is based on all known and perceived (either rationally or irrationally) information about whatever it is they are trading.
   This mass of competitive activity sets a price and only new, and by definition, unpredictable information or sentiment will change that price.
   You may be smart, but swimming against the current of millions of investors is almost impossible.
   Does the Internet stock bubble ring any bells?
2. It costs money to move money.
   Brokerage costs, tax implications, bid/ask spreads, management fees, research expenses and mutual fund expense ratios are pervasive costs that melt away profits.
   
3. Randomness rules.
   Can you control the marketing or management decisions of a company you believe is positioned for greatness? No.
   Can you consistently predict product failures, interest rate increases, new regulations, the demise of key personnel, political, social or regulatory changes, terrorist attacks or the weather? Impossible.
   

Behavioral psychologists are only recently coming to grips with the way our brains process information and make decisions when the outcome is unknown.
In fact, Princeton University psychology professor Daniel Kahneman won the 2002 Nobel Prize in economics for his efforts to model how and why people make decisions.
The Royal Swedish Academy of Science awarded the Nobel to Kahneman "for having integrated insights from psychological research into economic science, especially concerning human judgment and decision making under uncertainty.
" It seems we are wired to make poor investment decisions.
Not because we want to, but rather because our decision making processes fail to follow rational and logical rules.
We routinely embrace unimportant facts and random events as we search for patterns and try our best to bring perspective and clarity to the chaos of the marketplace.
Coming to grips with your hard-wired limitations as an investor is difficult.
In fact, your pattern seeking, short-term rationale system of decision making fights against you embracing the truth.
Every time you pick a stock that goes up in price, or sell just before a stock (or the market) turns south only serves to convince you of your prowess.
Guess who is intimately aware of your limitations and loves every move you make chasing returns and timing markets? Wall Street, that's who.
They thrive when you trade.
They profit when you pay for their myriad array of costly services.
All the "insider secrets" and "expert analysis" you glean from traders, money managers, brokers, sales agents and stock pickers are designed to work against your best interests by transferring your wealth into their pockets.
Why? Because they are no more adept at picking stocks or timing markets than you are.
Don't believe me? You should.
The evidence is exhaustive and the truth is self-evident, despite our willingness to reject it.
My favorite example of the inadequacy of stock pickers is an analysis of the Wall Street Journal's investment dartboard contest discussed in "The Great Mutual Fund Trap" by Baer and Gensler.
You may recall the contest.
In 1988 the Journal started comparing the performance of four stocks selected by a panel of four stock picking experts to four stocks randomly selected by the Journal's editorial staff who threw darts at a printout of the Journal's stock chart.
Baer and Gensler discovered that over the course of the 14-year contest the stock pickers and the dart throwers were in a dead heat.
The average return of the individual stocks and the percentage of winners were the exact same between Wall Street's best stock pickers and the random throwing of darts within 12-months after their selection.
Ponder that for a moment.
Four experts each picked their single 'best' stock each month.
Their reputations were on the line.
And yet, they could not consistently outperform a guy throwing a dart at a list of stocks.
Perhaps that is why Warren Buffet laid down $320,000 of his own money in a bet on January 1, 2008 with the hedge fund manager Protégé Partners.
Mr.
Buffet hates the cost investors' bear when they try to pick stocks, time markets and chase returns.
He decided to put his money where his mouth is and bet that the S&P 500 stock index would outperform (after fees) Protégé Partners fund of hedge funds over the next ten years.
Interesting stuff, to be sure.
But are you listening? Do you really want to maximize your investment returns? We base our advice to clients and our portfolio management on a foundation grounded in these five beliefs:

1. Markets Work.
   We embrace the belief markets are efficient.
   Active management (trying to pick stocks or time trades) adds cost and encourages investor behaviors that sabotage returns.
   
2. Risk and return are related.
   We use modern economic theory to identify dimensions of risk ideally suited to maximize long-term returns.
   
3. Structure determines performance.
   We utilize proper asset allocation to enhance portfolio returns.
   
4. Diversification is essential.
   We build portfolios structured to provide comprehensive asset class allocation and international exposure.
   
5. Beauty is in the eye of the long-term investor.
   The interwoven relationship between returns and short-term risk means investors must invest for the long-term to overcome the noise of today's turbulent market and enjoy the fruits of long-term growth.
   

I've said it before in this column and I repeat it now.
The choice is yours.
You can continue down a path strewn with potholes and pitfalls from the struggles of trying to pick winners or time markets or you can enjoy the fruits of Peaceful Wealth knowing you are done worrying about your investments.
Still unsure what to do? Remember Mr.
Buffet's bet.
The smart money is on Peaceful Wealth.