Investors Hurt Themselves Through Poor Timing

  |     |   1,067 posts since 2010


     "The recipe for successful investing sounds pretty simple: have

      reasonably good timing over the long haul and avoid big mistakes.

      ...The problem is that many investors seem to think they're better

      than that and can beat the stock market. Yet research consistently

      shows that it's a fool's game.

      ...[The Problem:] Funds posted an average annualized return of 7.1

      percent over the past 10 years, through the end of 2012, Morningstar

      found. But the returns that investors actually realized were a full

      percentage point lower: 6.1 percent.

      ...The better you know yourself — what you're good at, and when you

      get emotional — the better you're likely to do as an investor...

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  |     |   1,853 posts since 2010
Good point.

I have learned over the years to be humble when dealing with Mr. (maybe Ms.) Stock Market. 

1.  Never do hot fund chasing.  Past history is just that.  Many/most simply picks this year's hot fund with highest 2012 return and do fund hopping; and so on.  This is a losers' game.  Have s strategy or develop a strategy that fits your risk tolerance and time horizon.

2. Do not trust your good luck (you don't have it).  Do due diligence on studying funds of interest, tracking them on a daily basis.  Then when you decide to jump in, always do less than 5% to begin.  Then when you feel comfortable, buy more or sell when uncomfortable.  The worst strategy (many do that) is to jump in with all (or large percentage of one's portfolio) and lose it all.  Always leave some margin for error: Do small portion at a time.

3. Do not let market or noise drive your move.  Figure out a buy signal as well as exit condition in advance.

Good luck.



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