Joe Lucey

In his 1949 novel titled “1984,” George Orwell made ambitious predictions about things that would exist 35 years into the future, such as technological innovations in surveillance technology, speech-to-text software and missile detection systems. Many of those things became a reality during that timeframe.

In 2007, a report by NBC Nightly News made predictions for 10 years into the future. One correct prediction concerned the equivalent of today’s ubiquitous Wi-Fi and cloud systems, in which wireless communication technology is “almost invisible” and links all rooms in a house as well as the ability to access public and personal data from anywhere. Another successful prediction foresaw the creation of a breathalyzer-type device to detect various kinds of cancer.

In the “not-quite” column, NBC also reported there would be widespread biometric technology for security and privacy. We’re not there yet, but some manufacturers are starting to use fingerprints to unlock cellphones. Another prediction we have yet to achieve is a remedy that successfully treats Alzheimer’s disease. The latest treatments are able to mask Alzheimer’s symptoms, but are unable to slow its progression or impact the underlying disease.

Futuristic predictions can be interesting to ponder, but we have to be careful how much we read into them. In some ways, a 1940s author with an active imagination was more on target than scientific-based projections made just 10 years ago.

The same holds true for many things for which we tend to rely on guesswork, such as what teams will compete in the Super Bowl, when the next terrorist strike will happen or what investments may outperform in the market. When it comes to your finances, consider working with a financial advisor to create a financial strategy that will help you work toward your financial goals. 

The multifactor approach to investing combines multiple variables, like size and volatility, with the goal of achieving more consistent performance over time. The idea is that when one factor is underperforming, the other factor may be outperforming.

There are merits to various approaches to investing, whether you’re seeking out lower volatility or larger returns. However, over time, even investments traditionally associated with good long-term performance will occasionally underperform. The idea of multifactor investing is that different factors perform well at different times, and the diversification may be able to help avoid volatility.

The multi-factor approach is based on the following tenets:

• Similar stocks tend to have similar risk/return profiles
• Filtering information mathematically instead of qualitatively allows for the identification of specific underlying factors that drive returns
• This mathematical approach eliminates human or subjective behavioral biases

Please remember that investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.