REMINDER: You Are Terrible At Investing

During a presentation earlier today, Nuveen’s Bob Doll showed this disturbing chart that we’ve seen before.

It shows the annualized returns of various asset classes over the 20 year period ending 2011. It also includes inflation during that time.

It also includes the average investor’s investment returns, which are lower than everything else on the chart.

Doll noted that investors unfortunately have the tendency to move in and out of the market at all of the wrong times. (See also Gerard Minack’s work.)

“Amidst difficult financial times, emotional instincts often drive investors to take actions that make no rational sense but make perfect emotional sense,” said BlackRock back in 2012. “Psychological factors such as fear often translate into poor timing of buys and sells.”

It’s good reminder to think long-term and be patient.

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