Justin is one of the most recognisable and trusted market commentators on television, radio, and in the press.
Originally trained as a lawyer, he has observed the retail market industry for 20 years whilst at Barclays Stockbrokers and developed a unique understanding of the market’s roles and benefits for the private investor.
Each week we will bring you Justin’s latest thoughts and commentry.
INVESTOR ERRORS? – Read the full article here!
Trying to time the market and the fear of failure that forces selling.
There are some interesting statistics about the S&P500 Index. It seems that over the past 30 years it has managed an annualised return of 11.6%, which most right thinking people would regard as really rather spectacular over such a long period of time. This is put in better perspective if you consider that over that time inflation averaged 2.7%. So what is then more startling is the figure that shows that the average investor in the USA managed a return of a paltry 3.79%.
So what is the cause of such a shortfall in returns? Well potentially some weak performance by active managers could have some impact, along with the underlying costs and fees dragging down value. However it seems that the main culprits are the investors themselves and their fear of failure and losses.
This fear is perfectly demonstrated in times of market stress when investors panic and sell out at the worst times of the market. Examples are relatively few but the dramatic falls of Black Monday 1987 scared many after the binge of Big Bang the previous year.
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