Why are Investors so bad at Investing?

Contrary to popular belief, the major part of an investor’s return is not determined by asset allocation: i.e., what “basket” of stocks you are in. Nor is it determined by the overall performance of the stock markets. The main predictor of return is the behavior of investors themselves.
“We don’t see people with investment problems, we see investments with people problems” – anonymous
Indeed, investors are not good at investing! The Dalbar study below shows the under performance investors have had vs. the stock market as measured by the S&P 500 over the last 30 years.

 

What causes this and how can we stop ourselves from behaviors that lead us away from financial success?
It is all in the Mindful Money Book and will be an ongoing discussion with this blog.

See you soon!

Craig

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