Posted July 7th, 2011
Several studies suggest you might be. “Buy high and sell low” may be mixing up the old investment adage, but that is exactly what many investors do.
Morningstar, Dalbar and the Polytechnic Institute of NYU analyzed the returns achieved by investors over different time periods compared with the performance of the average mutual funds over those same periods. The results show that investors chase hot performance (after it has happened), buy after markets have done well, and sell after they experience significant declines.
Overcoming natural emotions to make better investment decisions is possible to do on your own—not unlike beginning an exercise regime. As with an exercise program, however, it may be easier to develop a plan and stay the course during various market conditions if you have an adviser to help keep you on track.