You are an active fund manager. You were recently promoted to the role of CIO. You are trying to revise the core investment philosophy of your firm. While reading some of the literature that you regularly send to your clients you find the following statements:

Core Investment Belief 1: Investment markets are not efficient, in that price does not always equal value and thus assets are often either overvalued or undervalued. There are less efficient markets in which skill and hard work can lead to a knowledge advantage providing superior investment returns.

Core Investment Belief 2: Actively managed, concentrated, high conviction portfolios are likely to outperform larger index-like portfolios.

Core Investment Belief 3: Investors are not rational but are influenced by emotions and inherent biases.

Core Investment Belief 4: Professionally managed funds provide more efficient and effective diversification than direct investment portfolios.

Core Investment Belief 5: Consistent excellent performance can only be achieved through superior knowledge of companies and their securities, not through attempts to forecast macro- economic factors such as the GDP growth rate, interest rates or market returns.

Core Investment Belief 6: Since predictive ability to correctly time markets is so difficult, portfolios should be fully invested whenever attractively timed assets can be bought.

Provide detailed comments on each of the investment beliefs above. State whether you support the belief or NOT, providing substantiation with academic citations and professional examples. (6 marks per belief, suggested total word limit 1500)