I spent my professional life – more than 45 years – working for and with large well-known investment management and investment banking firms. I’ve served at various times as an analyst, portfolio manager, senior investment executive, senior business executive and corporate director. On the buy side, the firms I worked for managed and sold mutual funds to retail investors and separate account investment management in a broad array of investment disciplines to large pension, endowment, public employee and other institutional investors. On the sell side, I’ve been associated with a substantial investment bank offering corporate finance, M&A and institutional research to corporate clients.I spent many years as Chairman of the Investment Committee of a large non-profit. Our portfolio was invested globally and my Committee’s responsibilities included hiring (and, occasionally, firing) consulting and portfolio performance measurement firms and, more importantly, hiring (and, more than occasionally, firing) institutional investment managers who managed portions of our overall portfolio. We used both active and passive managers. My CFA Charter number is under 5,000 and I understand that Charter numbers are now greater than 120,000.My personal approach to investing is based on my professional experiences. A few of a very large list of guiding principles are: • There is only one relevant measure of professional investment performance. It is the risk-adjusted performance of an overall portfolio compared to its pre-established benchmark over a reasonable period of time. Most plan sponsors will not hire a manager with a performance record shorter than 5 years. After hiring a manager, they look at performance on much shorter time frames. Portfolios that generate profits – but less than their benchmarks – are failures. • Generating Alpha – investment performance better than a pre-established benchmark after fees are paid – is the sine qua non of professional active investment managers and their clients. It is incredibly difficult to achieve, especially after transaction and management fees are included. • Passive (i.e. index) portfolios don’t care about Alpha. Typically they care about “Tracking Error”. Passive funds have tiny costs (“friction”) so they can get very close to zero tracking error. But, as long as they trade at all or charge any fees at all or run the portfolio by sampling or need to rebalance because of cash flows in or out the tracking error will never actually reach zero. • For most people and institutions – including me – the path to investment success is to focus hard on asset allocation, then buy low cost/low tracking error index funds for each of the categories you choose. On the other hand, everyone knows, especially people who read Seeking Alpha, researching and buying/shorting individual stocks or -- at the institutional level -- hiring or firing active managers is much more fun! • Personally, I drink my own Kool-Aid. About 90% of my portfolio is invested using low cost index funds to execute on a carefully considered asset allocation focused on multiple broad sectors of worldwide markets. I rebalance about annually. But, I spend a wildly disproportionate amount of time researching and investing (long or short) in typically less than a handful of stocks I find interesting, and I do each one with enough money that I really care about how it works out. • John Bogle was right. Years ago he created Vanguard on the principle that expense ratios matter. In aggregate, all investors' activities add up to average, by definition. And, it is unbelievably difficult to be above average. So, what you pay matters a lot. • In today’s usage, a “Hedge Fund” is generally a misnomer. When they were originally created, hedge funds had specific investment objectives and styles. Today, the closest style to a real "hedge fund" would be describes as "long/short equity". In today’s usage, “Hedge Fund” refers to a pricing structure. It is applied to any fund with any objective invested in any assets that is organized as a limited partnership and charges clients both a management fee and a carried interest in realized profits. These days, the management fee is usually 1-1/2 to 2%, plus a carried interest for the manager, typically about 20%. The shorthand for the pricing structure is “2 and 20” or "1-1/2 and 20". In earlier days 1/15 was more common. This explanation is in this profile because it is my view that it is unbelievably difficult, as a client, to earn an above average return when paying such enormous fees. But, plan sponsors continue to do it – so maybe I’m wrong. • I have never met (or even heard of) a short-term trader who has had more than momentary success. Individuals engaged in short-term trading (vs. longer-term investing) who claim long-term success have selective memories – eagerly talking about their winners and forgetting about their losers – and have never subjected their long term investment record to mathematical analysis. Institutional firms can't get away with that, as they need to publish all their performance numbers. • Similarly, I have never met (or even heard of) a professional or individual investor who has had long-term success by market timing. • Investing is fundamentally a batting average game. Long term, the best – not the average, but the best – professional institutional investors are successful on their individual stock picks around 55% of the time. Of course, that means they are unsuccessful about 45% of the time. • I drink that Kool-Aid too. When I buy or short individual stocks, I do careful research first. Once I've made an investment, I spend almost all my time focusing on factors that could prove I’m wrong! • When it comes to investments, I am a classic “on the other hand” thinker, and, therefore, please understand that everything I write on SA is caveated with the ending quote from any of Dennis Miller’s famous rants: "...of course, that's just my opinion. I could be wrong." • Enormous self-confidence – almost arrogance – and, at the same time, enormous humility are required to be successful as an active investor! You have to have serious conviction about an investment to put up your money. But, deep down you have to remember that, by definition, investing and the future are uncertain. It is very hard to distinguish “confidence” from “stubbornness”, but successful portfolio managers can do it most of the time. • Money moves markets. Bull markets are most often driven by loose monetary and fiscal policies. Bear markets are most often driven by tight monetary and fiscal policies. • Too much leverage stretching for extra return has caused every major financial crisis I’ve ever lived through or studied. • Flexibility is a hallmark of great investors. • It really IS true that Past Performance Does Not Guarantee Future Results. • There are innumerable investment-oriented aphorisms and maxims that I believe have just enough truth in them that I repeat them when appropriate. Here is a very tiny sample: o Don’t confuse wisdom with a bull market.o Don’t fight the tape.o Don’t fight the Fed.o Most of the time, the market -- especially in big stocks -- is right.o It's good to be right for the right reasons, but it's more important to be right.o The first rule of making money is: don't to lose it! After a loss (realized or not) the mathematics of breaking even are daunting. If you lose 50% on an investment, you have to make a 100% gain on that or something else just to break even. If you lose just 33% on something, that, or something else, has to go up by 50% for you to break even.o More money has been lost in the search for high yield (or high return) than in all the financial scandals in history.o Sometimes, the return OF principal is much more important than the return ON principal.o Bulls make money and Bears make money, but Pigs get slaughtered.There are lots and lots more of these! All of the opinions and perspectives I express on Seeking Alpha are my own and in no way reflect the opinions or perspectives of any business with which I am currently associated.