Posts Tagged ‘Morningstar’
Like Odysseus, automatic investments help investors avoid the Siren call of market timing
We call it stupid if someone takes a $55k job, even if he is offered the same job at $100k.
We call it market-timing when the same thing happens in the stock market. The long-term average annual market return is 10%, but the long-term average annual investor return is only about 5.5%. This is documented both by Dalbar’s study titled “Quantitative Analysis of Investor Behavior” and Morningstar’s research on fund returns and investor returns.
How could this possibly happen?
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My friend Carl Richards made an interesting observation in his last post:
Just when we need something to zig, they all zagged together!
Some people draw the conclusion that diversification no longer works. I strongly disagree.
The Investment Scientist 